If you’ve already reached or are nearing retirement age, you might be wondering how easy it is to get a mortgage later on in life. You might be in the market for a mortgage for any number of reasons — maybe you’re looking to downsize or relocate — but no matter why you’re looking for a mortgage, there are options for you to pursue if you need a mortgage in your 60s, 70s, or beyond.
This article does not constitute advice. Professional advice should be taken prior to acting on any part of it. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.
There are always challenges when it comes to home-buying, but retirees face an extra set — ones that are constantly changing, forcing them to adapt if they want to get into the home of their dreams. And it’s not just limited to needing a mortgage to buy a new home, even those looking to remortgage with their current home or even those wishing to help out their family who want to buy a home will need to know what it will take to obtain a mortgage.
Will your loan extend beyond retirement age?
It’s very common for mortgage providers like banks and building societies to be reluctant to approve loans that will extend beyond retirement age when your income will most likely be reduced compared to when you were working. In truth, many people do tend to work and bring in money beyond retirement and will have no issue handling mortgage payments because they’re either working past retirement age or they have plenty of income from savings and investments to support their lifestyle once they stop working.
Interest-only mortgages
One particular mortgage option aimed at older borrowers is an interest-only mortgage. These are often marketed toward retirement age individuals because they might struggle to get a traditional mortgage so late in life. Of course, each lender and indeed, each loan will differ so it’s important to find out how much you could possibly borrow against your property.
This will not work for additional properties, but a retirement interest-only mortgage is available on your main residence and is very similar to a standard interest-only mortgage. There are, however, two key differences. The first is that the loan is usually only paid off when you die, move into long-term care, or sell the property; and the second is that you only have to prove you can afford the monthly interest repayments.
Retirement interest-only mortgages technically have no minimum age requirement, but they’re typically targeted at older borrowers, including pensioners who might have difficulty qualifying for a traditional mortgage. This is because you’re less likely to borrow a significant amount and more likely to be able to pay it off.
Be careful to read the terms
As with any other mortgage, your terms will vary based on your provider and the specific deal you get. Some retirement interest-only mortgages will have the same terms as a regular mortgage, meaning the loan will require repayment after a certain number of years or once you reach a certain age while others will let you repay capital along with the interest, allowing you to cut down on the size of your loan over time.
This way, you will be able to pass the property on to your loved ones without also passing along a hefty mortgage bill as well. You will still need to pass affordability checks and provide proof that you’ll be able to afford the interest-only repayments otherwise your home will be at risk.
Need to discuss your options?
No matter what your reason for searching for a mortgage later on in life, you should still be prepared and shop around for the best deal for you. If you need help finding the right mortgage, we’re here to help.
