Vernon Building Society has reported a 158% increase in its retirement interest-only (RIO) mortgages for the period between January and May, compared to the same five-month period last year.

The society suggested that RIO mortgages are “growing in popularity” as people consider more flexible and potentially lower costs alternatives to equity release.

RIO mortgages offer a flexible option for retired borrowers who don’t want to be limited by a set loan term but want a regular monthly payment that can be taken from a pension or other income.

Unlike a lifetime mortgage through equity release, borrowers are not locked into a lifetime fixed rate, making it less costly to repay the loan early if their circumstances change.

“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,” commented head of mortgage and savings distribution at Vernon Building Society, Brendan Crowshaw.

“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.”

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