Traditional mortgages, retirement interest-only (RIO) mortgages, and equity release are all types of property-related loans, but they differ in terms of purpose, repayment, eligibility, and features. Here’s a breakdown of the key differences between these three types of mortgages:

  1. Traditional Mortgage:

A traditional mortgage is a loan used to purchase a property. The borrower pays a down payment (typically a percentage of the property’s value) and borrows the rest from a lender. The loan is repaid over a fixed term, usually 25 to 30 years, through monthly payments that include both principal and interest. The borrower gains ownership of the property upon completion of payments.


  • Purpose: Used for property purchase and remortgages
  • Repayment: Monthly payments cover both principal and interest.
  • Eligibility: Based on income, credit history, and affordability.
  • Features: Ownership of the property is transferred to the borrower.
  1. Retirement Interest-Only (RIO) Mortgage:

A retirement interest-only (RIO) mortgage is designed for older borrowers who are retired or approaching retirement. It allows borrowers to make interest-only payments while they live in the property. The loan is repaid when the property is sold, the borrower moves into long-term care, or upon the borrower’s death. RIO mortgages were introduced as an alternative for older borrowers who might not meet the affordability criteria of traditional mortgages.


  • Purpose: Can be used for property purchase or remortgage.
  • Repayment: Interest-only payments; the loan is repaid when specific events occur.
  • Eligibility: Often based on income, affordability, and age (typically for those aged 55+).
  • Features: Allows older borrowers to access funds while remaining in their property.
  1. Equity Release:

Equity release is a financial product designed for homeowners aged 55 and older. It allows homeowners to access the equity in their property without having to sell it. There are two main types: lifetime mortgages and home reversion plans. With lifetime mortgages, borrowers can access a lump sum or regular payments while maintaining ownership of their property. The loan and accumulated interest are repaid when the property is sold, usually upon the borrower’s death or move into care. Home reversion plans involve selling a portion of the property to the provider in exchange for a lump sum or regular income.


  • Purpose: Accessing home equity without selling the property.
  • Repayment: Varies based on the type of equity release; typically repaid when the property is sold.
  • Eligibility: Typically for those aged 55 and older; no affordability checks.
  • Features: Homeownership is retained (for lifetime mortgages); options for lump sum or regular income.

In summary, traditional mortgages are used to purchase properties and involve regular repayments of principal and interest. RIO mortgages are designed for retirees and involve interest-only payments with repayment upon specific events. Equity release products allow older homeowners to access their property’s equity while remaining in the property, with repayment typically occurring when the property is sold. Each type of mortgage has its own eligibility criteria, repayment structure, and features, catering to different financial needs and life stages.