Vernon Building Society has reported a sharp rise in demand for its retirement interest-only (RIO) mortgage range, with a 158% increase in completions between January and May 2025 compared with the same period in 2024.
The growth reflects a broader shift in how older homeowners are managing retirement finances, with many choosing to unlock the equity in their homes without resorting to lifetime mortgages or equity release schemes.
As more retirees look for ways to supplement their income, fund later-life expenses, or help family members step onto the property ladder, RIO products are becoming a central part of later life lending strategies.
The mutual’s RIO offering is available to borrowers aged 55 and over across England and Wales and can be used either to purchase a new property or to release cash from an existing home.
Borrowers make regular monthly interest payments and the capital is typically repaid from the sale of the property when the borrower either moves into long-term care or dies.
Unlike lifetime mortgages, which often involve rolled-up interest and early repayment charges, RIO products offer more flexibility. Borrowers are not tied into a fixed rate for life, allowing them to repay the loan early without significant penalties if their circumstances change.
Brendan Crowshaw, head of mortgage and savings distribution at Vernon Building Society, said: “We’ve seen a jump in popularity for our RIO mortgage range as more people in retirement are looking to borrow against the value of their home whilst making monthly interest payments.
“RIO mortgages are becoming increasingly popular as people live longer and face rising living costs. For many, they provide the stability needed to budget with confidence – while also offering greater certainty of leaving an inheritance.”
Crowshaw also emphasised the lender’s inclusive underwriting approach: “The Vernon accepts applications from customers who have a lasting power of attorney in place.
“Additionally, we support those with complex incomes, so in the case of RIO, we look at different pension types and drawdown periods, and other income, which aligns with Vernon’s ethos of offering flexible and inclusive lending.”
The society’s RIO products range in size from £25,000 to £750,000, positioning it above many rivals in terms of loan size. Its products are available up to a maximum loan-to-value of 50%, with no maximum term.
Current options include a 5-year fixed at 5.29% and a 3-year fixed at 5.45%, both with no arrangement fee, as well as a 5-year discounted product at 5.34% with a £499 arrangement fee.
