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Getting a mortgage when retired might seem challenging, but it’s more common than people realise.
Lenders understand that life continues beyond retirement, and many are happy to offer mortgages to retirees.
Whether someone is considering moving, remortgaging, or releasing equity from their home, there are flexible options available to meet their needs.
There are mortgages in retirement that run for a set number of years that require a monthly payment, and other types that have no end date and no or optional payments. Our specialist over 60s mortgage advisors will recommend the best one for your situation.
Yes, it’s possible! While the application process may differ slightly from when someone was working, securing a mortgage in retirement is achievable.
For regular mortgages, lenders will focus on pension income, savings, and other financial assets to ensure the borrower can afford the repayments.
For equity release mortgages, lenders will focus on the age of the applicant/s, their health, the amount of deposit or equity available and property valuation.
There are many reasons why someone might need or want a mortgage during their retirement years, including:
After years of living in a larger house, many retirees decide to downsize to a smaller, more manageable property. A smaller home can reduce living costs and be easier to maintain.
Even after selling the current home, a mortgage in retirement might still be needed to cover the cost of the new property.
Many retirees choose to move closer to family or relocate to an area they’ve always dreamed of living in.
Whether it’s to be near children or grandchildren, or to enjoy a quieter lifestyle, a mortgage can help make this move possible.
In some cases, retirees may need to purchase a new property before their current home is sold.
A bridging loan mortgage can act as a chain-breaker, allowing them to secure their new home without delays, avoiding the risk of losing out on the property they want.
A mortgage can be a way to release some of the value tied up in a property.
Whether to fund home improvements, travel, or simply enjoy a more comfortable retirement, an equity release or remortgage can provide the extra cash needed without having to sell the home.
Some retirees want to financially support their children or grandchildren, whether it’s helping them get on the property ladder or assisting with education costs.
A mortgage when retired, particularly through equity release, can provide the necessary funds for these family needs.
Life can be unpredictable, and big expenses may arise, whether for medical costs, home repairs, or other financial needs.
A mortgage can offer financial flexibility to manage these costs without impacting everyday living expenses.
Divorce or separation later in life can mean splitting assets, including the family home.
If one partner wants to keep the home or purchase a new one on their own, a mortgage when retired can help provide the funds needed to buy out the other party or secure a new property, offering financial stability after the separation.
As people age, their home might need adjustments to be more accessible, such as installing stairlifts, widening doorways, or adding ramps.
A mortgage can help fund these home improvements, making the property more suitable for their needs in later life.
There are several mortgage options available for those in retirement, depending on their financial situation and goals:
For retirees with a steady pension income and strong financial health, a standard residential mortgage may still be an option.
While lenders may offer shorter terms due to age, it’s still possible to secure a mortgage when retired with favourable terms if the criteria are met.
Retirement Interest-Only mortgages (RIO) allow retirees to pay only the interest each month, with the loan amount repaid when the property is sold.
This option is ideal for those wanting to remain in their home while keeping monthly costs low.
Equity release enables retirees to unlock some of the value in their home without having to sell or move.
The funds can be used for any purpose, and the loan is repaid when the property is sold, usually when the homeowner passes away or moves into long-term care. Monthly payments are optional.
A Home Reversion Plan allows homeowners to sell all or part of their home to a reversion company in exchange for a lump sum or regular payments.
Although the homeowner no longer owns the property outright, they retain the right to live in the home rent-free for the rest of their life.
When the property is sold (typically after the homeowner passes away or moves into long-term care), the reversion company takes its agreed share of the sale proceeds.
This is a good option for those looking to unlock value from their home while staying in it.
Bridging loans are short-term loans that help retirees bridge the gap between buying a new home and selling their current one.
These loans can be useful when there’s a delay in selling the existing property, allowing the borrower to secure their new home without losing out due to timing issues.
They are typically repaid once the old home is sold, but they tend to come with higher interest rates due to their short-term nature.
Secured loans allow retirees who currently have a mortgage to borrow additional money by using their property as collateral.
This option is often chosen by those who need to raise funds for large expenses, such as home improvements, debt consolidation, or helping family members.
Since the loan is secured against the property, it may offer lower interest rates than unsecured loans, but it’s important to ensure repayments can be met to avoid the risk of losing the home.
A further advance allows retirees to borrow more money from their current mortgage lender, using their existing property as security.
This option is ideal for retirees who need additional funds, perhaps for home renovations or other large expenses, without remortgaging or switching lenders.
In some cases, a combination of the above options might work best.
For example, a retiree could use a bridging loan to secure a new home while their existing one is on the market, and then opt for a lifetime mortgage as the exit once the existing property is sold.
Every situation is unique and combining different retirement mortgage products can offer the flexibility needed to meet specific financial goals during retirement.
This is where utilising the services of an independent over 50s mortgage broker can save you thousands of pounds.
For retirees considering a mortgage, a professional mortgage advisor can make the process as smooth and straightforward as possible.
An advisor will take the time to understand the borrower’s situation, explain the available options clearly, and help find the right mortgage to suit their needs.
Whether it’s for moving home, releasing equity, or helping family members, the advisor will be there every step of the way, ensuring the client feels confident and secure in their decisions.
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UK Moneyman Limited is Registered in England, No. 6789312
Registered Address: 10 Consort Court, Hull, HU9 1PU.
Authorised and Regulated by the Financial Conduct Authority.
We are entered on the Financial Services Register No. 627742 at www.register.fca.org.uk
UK Moneyman Limited is Registered in England, No. 6789312
Registered Address: 10 Consort Court, Hull, HU9 1PU.
Authorised and Regulated by the Financial Conduct Authority.
We are entered on the Financial Services Register No. 627742 at www.register.fca.org.uk
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