22% of those who take out a retirement interest-only (RIO) mortgage do so to pay off an existing mortgage, according to research from Hodge.
Buying another property is the second most popular reason for RIO borrowing, at 20%, followed by debt consolidation at 18%.
16% will use their RIO mortgage to provide a family gift and 14% plan to make home improvements.
The data also showed the average RIO mortgage taken out in 2019 was £129,576, which is relatively close to the average mortgage debt of a first-time buyer (£138,999).
Matt Burton, managing director of mortgages at Hodge, said: “Despite figures saying that the uptake on RIO mortgages has been slow, we have been encouraged by the amount of people using the product to achieve their goals – which again made for interesting reading – with an amazing 16% of our customers using their payment to give a family member a gift.
“It seems the bank of the grandparents is well and truly open with our Hodge customers as they use their property’s equity to help out family.
“The data also shows that our customers are using the RIO mortgage to their own advantage, with a fifth (20%) using the loan payment to buy another property and 14% using the money for home improvements – which could be a sound investment."