The RIO Mortgage Application Process, Step by Step

A retirement interest-only (RIO) mortgage application usually moves from a first conversation with an adviser to an agreement in principle, a full application, a property valuation, a mortgage offer and legal work. The Equity Release Council says a RIO mortgage normally completes in four to eight weeks, though some take longer.

If you are still deciding whether this kind of borrowing fits, start with our guide to the retirement interest-only mortgage. This page assumes you are thinking of applying and want to know what happens, and when. We do not provide financial advice.

Before you apply

It helps to check the basics first. Lenders look at your age, your home, your credit history and, above all, whether your retirement income and affordability can support the monthly interest for life. Our eligibility guide covers these checks and the documents lenders usually ask for.

It is also worth being clear about what the money is for, and whether you have looked at other routes. Some people find they can downsize instead, or combine a smaller loan with other savings. An adviser will ask about this anyway.

Step by step through a RIO mortgage application

1. Speaking to an adviser

Many people start with a mortgage adviser who deals with later-life lending. The adviser asks about your income, spending, health, plans and family. They then look for products that may fit. If they recommend a mortgage, FCA rules say they must explain in writing why it suits you.

Our guide to FCA-regulated advisers explains how to check an adviser and how they are paid.

2. Agreement in principle

An agreement in principle is a lender's early indication of whether it might lend, and roughly how much. It usually involves a credit check. It is not a promise to lend, and the final decision comes later.

3. Full application and affordability checks

Next comes the full application. You provide proof of identity, income and spending. The lender then carries out a detailed affordability assessment. For joint applications, the Equity Release Council says couples must show they could afford the monthly payments on their own if the other died. Full and accurate answers matter: an application built on a good month rather than usual income is less reliable for the borrower as well as the lender.

4. Property valuation

The lender arranges a valuation of your home. This confirms the property's value and that it is suitable security for the loan. It is not a full survey of the building's condition. A valuation below what you expected may reduce the amount the lender will offer.

5. The mortgage offer

If the lender is satisfied, it issues a mortgage offer, along with a standard illustration called the ESIS (European Standardised Information Sheet). This sets out the rate, fees, payments and any early repayment charges. For many regulated mortgages, FCA rules require a reflection period of at least seven days after a binding offer, to compare offers and think about the implications. Some RIO mortgages may fall outside that rule, depending on how they are classed, so it is worth asking the lender or adviser whether your offer has a reflection period and how long it lasts.

6. Legal work and completion

A solicitor or conveyancer handles the legal work. They check the title to your home and register the lender's charge. If you are remortgaging, your existing lender is repaid on completion. Any money left over is then paid to you.

How long a RIO mortgage application takes

Four to eight weeks is a common guide, but every case is different.

Things that can slow an application down include:

• missing or out-of-date documents, such as pension statements;
• questions about irregular or overseas income;
• a valuation that raises questions, for example about the lease on a flat;
• waiting for a redemption figure from your current lender.

If your current interest-only mortgage is ending soon, it can help to keep your current lender informed about the application. FCA rules require lenders to deal fairly with customers whose mortgage term has ended with money still owed.

Costs during the application

Costs vary by lender and adviser. They can include arrangement, valuation, advice and legal fees. Some products also carry early repayment charges, and your existing mortgage may have its own. Ask for all costs in writing before you commit.

If your application is declined

Ask the lender or adviser why. The reason may point to something you can fix, such as an error on your credit file. It may also mean a RIO mortgage is not the right fit. Our guide to RIO vs standard interest-only mortgages explains a related option. Equity release and downsizing are others.

Not sure where to start?

An FCA-regulated mortgage adviser can take you through a RIO mortgage application, explain each step and compare it with your other options. MoneyHelper also offers free guidance on later-life borrowing. We do not provide financial advice.