Lifetime Mortgages vs RIO Mortgages – What Over-55s Need to Know About Equity Release
About this episode
This episode explains the differences between lifetime mortgages and RIO mortgages for those over 55 considering equity release options.
Home Equity Release Mortgages Explained If you’re over 55 and property-rich but cash-poor, home equity release could be an option worth understanding. In the UK, the most common type is a lifetime mortgage. Watch full video: https://youtu.be/eNmhqQmthNw In this Money Tip’s interview, Equity Release Mortgage expert Darren Cohen, explains that a lifetime mortgage allows you to borrow money secured against your home while retaining ownership. Unlike a traditional mortgage, you don’t have to make monthly repayments unless you choose to. Instead, the interest typically “rolls up” and is added to the loan. The balance is repaid when you die or move into long-term care, usually from the sale of the property. There are several types or variations of lifetime mortgages: 1. Roll-up Lifetime Mortgage – The most common option. No monthly payments are required; interest compounds over time, which can significantly increase the mortgage debt. 2. Interest-Paying Lifetime Mortgage – You pay some or all of the monthly interest to reduce the final balance. Early repayment penalties typically apply during the first seven years. 3. Drawdown Lifetime Mortgage – You release funds in stages, meaning…
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