Getting a mortgage can be more difficult if you are close to or have started your retirement. Here’s how to find a retirement mortgage whether you want to move house or remortgage your current home.
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.
It's commonly believed that mortgages for older borrowers are hard to get. That might be true to an extent, but it doesn't mean that older people can't get a mortgage.
While there is no official maximum age when it comes to applying for a mortgage, mortgage lenders will impose their own maximum age limit:
Typical older mortgage age limits can be:
When you take out the mortgage: usually a maximum age of 65 to 80
When the mortgage term ends: usually a maximum age of 70 to 95
This means that even if you are below the maximum age for a mortgage, its term could be limited by how old you are.
Yes you can get a mortgage at 60 and even a mortgage over 65. Find out more about mortgages for over 60s
If you’re 60 and want a mortgage that must be paid off before you reach 70, its term could be no more than 10 years.
You have a better chance of being accepted if you have a strong credit history and if your income is high enough to easily cover the mortgage repayments.
Why do you need a new mortgage?
To remortgage to get a better deal on your current home, especially if a fixed or tracker rate has ended
To move house, for example downsizing to a smaller property
If you retire before you have finished paying off the mortgage, you will not have a regular salary any more. Your income will usually go down, meaning lenders will be unsure if you will still be able to afford the mortgage repayments.
This means that offering you a mortgage is riskier as you get older. Lenders have to follow the Mortgage Market Review (MMR) rules, which mean they have to make sure you can keep up with repayments over the full term of the mortgage.
Yes, some lenders will let you:
Take out a mortgage after you have retired
Take out a mortgage that will not be paid off until after you have retired
You will need to prove that the income from your pension would be more than enough to cover the repayments on the mortgage. It is usually easier to do this if you are already retired because you can show how much you get each month.
If you have not retired yet, you will need to ask your pension provider to give confirmation of your:
Current pension pot value
Expected retirement income
You could also give proof that you will have an income from other investments like shares or property.
Most mortgages that accept older borrowers come with fixed interest rates, and many offer rates that track the Bank of England base rate.
There are also some offset, cashback, discount and stepped mortgages available too. Here is how to work out which types of mortgage is best for you.
How to get a mortgage if you are an older borrowers
Check the maximum age you can be when you apply, which is shown for each mortgage in our comparisons
Speak to a mortgage broker because some mortgages for older borrowers are only available through them, and they will look at your finances to find you a suitable deal
Look for specialist mortgages offered by lenders aimed at older borrowers, which you can usually find through mortgage brokers
Pick a mortgage that is right for your circumstances
A retirement interest only mortgage is the same as an interest only mortgage, except that the loan is only paid off either when you die, move into long term care or sell your home.
So you still have to be able to afford monthly interest repayments.
A lifetime mortgage is also a form of equity release - in effect freeing up money tied up in your home so you can spend it now. You still own your home, can continue to live in it and you may be able to keep some of the equity in the home to leave as an inheritance.
You pay interest which can be paid monthly or deferred to be paid off with the main part of the mortgage.
The mortgage will be paid off along with any interest that has built up when you die or move into a care home. If there is any money left over that will go to any beneficiaries you name in your will (it’s important to make a will if you are taking out a mortgage).
Most lifetime mortgages also include a no-negative-equity guarantee. This means that no debt will be passed on even if the amount realised from the sale of your house isn’t enough to cover the amount outstanding on the mortgage, including any owed interest. This can be helpful if property prices fall or interest payments have built to a high level.
You could use an equity release mortgage to withdraw part of the share of your home that you own as a lump sum or monthly income. You could then use this to:
Pay off your existing mortgage
Pay for a major purchase or unexpected cost
Fund your retirement
The amount borrowed will be repaid back when the house is sold, usually after the borrower has moved into a care home or passed away.
However, it can be an expensive way to borrow. Find out here how equity release works and see if it is right for you.
To understand the features and risks, ask for a personalised illustration from a lifetime mortgage company. Check that this type of mortgage will meet your needs if you want to move or sell your home or you want your family to inherit it. If you are in any doubt, seek independent advice. Your home may be repossessed if you do not keep up repayments on your mortgage.
Whether you are looking to move up the property ladder, downsize or just relocate we can help you find the right mortgage when you move home.