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Can I get a retirement mortgage?

Yes, there are lots of reasons why you might need a mortgage going into retirement.

Popular retirement mortgage uses are:

  • Moving home or buying a second property.
  • Repay an existing mortgage.
  • Debt consolidation.
  • To release tax-free cash from your equity.
  • Divorce/separation.
  • Anything else or a more complicated situation.

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What types of retirement mortgage are available?

There are 3 main types of retirement mortgages available, these are:

  1. A traditional mortgage, these can run until age 80+ depending on your situation and can be on a repayment, interest-only, or part and part basis.
  2. Retirement interest-only mortgages, these run for life, and you’ll pay monthly interest payments for your lifetime.
  3. Equity release mortgages, the most common type is a lifetime mortgage, these also run for life and monthly payments are not required, the interest will roll-up if no payments are made.

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Which retirement mortgage is right for me?

It’s important to seek independent mortgage advice to explore all your options and to ensure you keep your interest payments to a minimum.

Which type of retirement mortgage our team will recommend will depend on:

  • Your current and future income.
  • Your plans with the property.
  • Any foreseeable changes.
  • Sole of joint names.
  • How much equity you have and how much you require.
  • Your credit score.

As part of our free, no-obligation consultation we’ll listen to your needs and recommend the most cost-effective way forward for you.

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The 5 Retirement Mortgage Options

Standard Residential Mortgage  

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If you are close to retirement, semi-retired or already retired and have good income, you may qualify for a standard residential mortgage. Some mortgage lenders now offer their products to older borrowers who qualify.

You’ll need to pass the mortgage lenders criteria and affordability assessments along with passing a credit score.   Often these go up until the age of 80/85 with good pension income.

Retirement Interest Only Mortgage (RIO)

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A retirement interest-only mortgage, also known as a RIO, is an interest-only retirement mortgage aimed at older borrowers who can afford to make interest payments per month.

Very much like a standard mortgage, with a RIO you will need to provide details of your income (working and/or pension) and evidence to the lender that you are able to afford to make the interest-only payments per month. A RIO is available for both working and retired clients who are looking to remortgage or purchase a new home.

If you’re doing a RIO application in joint names, the income will generally be assessed based on which of you would have the lower income if the other died to ensure that they can afford the mortgage on their own. A RIO mortgage doesn’t have an end date and the capital is repaid when the second applicant goes into long-term care or dies, usually from the sale of the home.

Term Interest Only Mortgage (TIO)  

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A term interest-only mortgage, also known as a TIO, works in a similar way to a RIO. A TIO is available to both retired and working applicants aged 50+ and can be used to remortgage or purchase a new home. You’ll pay interest-only payments per month.

Unlike a RIO, a TIO will have a set term of up to 30 years. At the end of the term, a TIO can then be repaid from the sale of the property or via the funds raised from a Lifetime Mortgage (see option 4 below). A TIO is a great product that can be used to find the gap between a regular and a lifetime mortgage product to save interest rolling up.

These retirement mortgage options are relatively new to financial services. There are some brilliant products and features available and your later life specialist will run through these with you.

Equity Release Mortgage  

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Due to the nature of how the interest can roll up, all other types of mortgage product should be considered before an equity release plan to ensure you’re not paying more than you must.

There are two main products within the equity release range of mortgages, the first is a Lifetime Mortgage and the second is a Home Reversion Plan. A lifetime mortgage is the product that is the most popular in the equity release range.

A lifetime mortgage is not income-assessed (although your advisor will take your income into account when making a recommendation) making it particularly suitable for clients who are asset rich but with low incomes. The amount you can borrow is based on your age or, if borrowing as a couple, the age of the younger borrower, and the value of the property. Some lenders also use enhanced medical underwriting which, if you have any qualifying conditions, can mean eligibility for a higher loan amount or better terms

Over the years, equity release has received lots of regulatory influence and innovation by mortgage lenders which has resulted in the creation of some brilliant product features in this space designed for flexibility and money saving.

An equity release mortgage provides you with a lump sum (or smaller chunks via drawdown lifetime mortgages) with no requirement to pay monthly payments. It can be used to release tax-free cash from your property for various reasons without the need to sell it.

If you can afford to pay monthly interest payments this can help to keep the cost of the loan down significantly, our mortgage broker team will run through this with you.

Traditionally the interest on the capital rolls up and the plan is usually repaid on death or when the sole or second applicant goes into long term care.  Changes in the industry, and a demand for more flexibility, now mean that you can make penalty free payments on all lifetime mortgages (within lender limits – usually up to 10% of the amount borrowed can be paid each year before penalties apply). This means that, if you can afford to, you can pay the interest (and more) monthly, just like an interest only mortgage so that the amount you owe doesn’t increase over time.

Combination of the Above

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Retirement mortgages can often involve a long-term plan and the products recommended could be a combination of the above.

It is not unusual for us to recommend a phased plan starting with a regular mortgage or TIO option as above with a view to using a lifetime mortgage in the future or as a fallback to ease the pressure on your income should one of you die.

All later life lending is highly personalised as no two clients’ circumstances are the same. The advice process encourages you to have a thorough look at your retirement finances with support from an advisor and to identify gaps or areas where you might be financially vulnerable. We will then tailor our recommendation to best fit your needs.

8 Reasons to Choose UK Moneyman for Over 50s Mortgage Advice

Working hard 7 days a week!

We work to a time that suits you. You can put your personal life first, attending your free mortgage appointment at a time convenient to you.

Free initial mortgage appointment.

During your free mortgage appointment, we can go over your options with you. This includes lifetime mortgages.

We are proud members of the Equity Release Council!

As members, we have agreed to follow the Council rules, safeguarding our customers and providing a high standard of conduct.

We work for you, we have your best interests at heart.

We will be open and honest at all times; finding you a deal that suits your personal and financial situation.

Jargon-free insurance advice for you and your family.

We'll recommend the most suitable insurance products to protect you and your family, should you become seriously ill or unable to work.

1000s of mortgage options.

We will compare different mortgage deals across the market. We have a large panel of mortgage lenders to choose from.

We are dedicated and experienced.

We have been in the mortgage industry now for over two decades. If you need help with a mortgage into retirement, get in touch!

From the start until completion.

We will be there for you throughout your whole mortgage process, recommending the best mortgage deal for your situation.

Retirement Mortgage Options FAQs

Can I buy a house when I’m retired?

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No, it is not too late to buy a house when you are retired. Many people continue to purchase homes well into retirement, and even beyond that. Often, older clients choose to move home to be closer to family members or to downsize to a smaller property.

It’s important to consider your personal financial situation and goals before making any decisions, but age alone is not a determining factor in whether you can purchase a home.

Speaking to a mortgage broker is vital and could save you a lot of money in the long term. The retirement mortgage market is specialist and there are lots of considerations. Retirement mortgage options are not something that you could compare deals online etc, please seek reputable later life specialist advice.

What is the age limit when getting a mortgage? 

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There isn’t one, we have access to a full range of mortgage solutions from aged 18 to 100+. Your mortgage advisor will recommend the best product for you based on your age, income and objectives.

There are all kinds of mortgage available including fixed and variable interest rates.

Can I get a mortgage if I’m retired?  

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Yes, you can get a mortgage after you retire, there are various retirement remortgage options available for you and which one your mortgage broker will recommend will depend on lots of factors.

Options such as whether you can afford or wish to make monthly payments, how much you are looking to borrow and your pension income will be discussed.

Can I repay debts using a mortgage if I’m retired? 

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Yes, this is one of the most popular older clients contact us to become debt free in retirement. Often, they are having difficulty meeting the credit card and loan repayments from their pension income.

As above, what type of mortgage is most suitable will be recommended by your mortgage broker. This is also known as a debt consolidation mortgage, this type of mortgage is not without risk though as you’ll be taking unsecured credit and securing it on your home.

The risks will depend on which mortgage type is recommended by our team and all the risks associated with this will be discussed with you, so you fully understand any implications, including repossession.

Can I get a buy to let if I’m retired?  

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Yes, you can get a if you’re over 60. Buy to let criteria is very different to a residential mortgage and how much you can borrow will be calculated using the rental income you’ll receive.

Often, clients choose to invest their tax-free pension lump sum into property with a view to supplement their pension income and to provide an asset to be passed on to their family in the long-term.

Is the mortgage application process the same when you're retired?  

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Yes and no, the mortgage process for a regular mortgage is different from the other types. Our expert mortgage broker team will help and guide you through the application process to ensure we have all the documents that are required.

You’ll still need to provide ID, document your pension income and provide details of any spouse pension if applicable.

Why is it difficult getting a mortgage when you’re retired? 

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It’s all based on affordability which is calculated using the number of years you have left at work. The difficulty will be lower if you have a great pension income and are looking to borrow a smaller amount.

Younger applicants can spread the mortgage amount over more years, often 30 to 40 years which makes the monthly payments more affordable. With retired applicants, often, a regular mortgage doesn’t fit affordability. This is where the other retirement mortgage options can be considered.

Please remember to use a dedicated later life specialist mortgage broker with the full range of lending solutions.

Which mortgage is best for pensioners? 

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The best mortgage for pensioners depends on your personal circumstances and financial goals. Some options to consider include fixed-rate mortgages and variable-rate mortgages.

Other alternatives can include retirement interest only (RIO) mortgages, term interest only (TIO) mortgages and equity release, which includes both lifetime mortgages and home reversion plans.

Your dedicated later life mortgage advisor will take a look at your personal and financial situation, as well as your future goals, in order to best advise on which route would be most suitable for you.

Can I get a mortgage if I’m self-employed and semi-retired? 

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Yes, you can get a mortgage if you’re self-employed and semi-retired, but you’ll need to provide evidence of your income and show that you can afford the repayments. Again, if you are part-retired and part-working, there may be alternative retirement mortgage products available to you.

Self-employed mortgage advice is specialist, along with the later life range therefore it’s always best to talk through your options with our team.

How much can I borrow on a mortgage if I’m retired? 

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The amount you can borrow on a mortgage if I’m retired will be dependent on various factors, such as your income, outgoings, credit score, and the value of the property you want to buy.

Mortgage lenders typically use affordability assessments to determine how much they are willing to lend.

This is different with some of the retirement mortgage options above, so it’s always best to speak with a mortgage broker to find out an accurate how much you can borrow figure.

How does my age affect my mortgage eligibility?  

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Your age can affect your mortgage eligibility as some mortgage lenders may view older borrowers as higher risk and may be concerned about your ability to repay the loan if you retire before the mortgage is fully repaid.

So long as you are able to prove that you have a sufficient income, you should in theory still be able to take out a mortgage.

How many years mortgage can I get in retirement? 

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The number of years for a mortgage into retirement will depend on various factors, such as your income, outgoings, credit score, and the property’s value.

Mortgage lenders typically use affordability assessments to determine the maximum term they are willing to lend. Other types of mortgages designed for retired applicants include lifetime mortgages with no end date.

What is equity release?  

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There are two main products within the equity release range of mortgages, the first is a Lifetime Mortgage and the second is a Home Reversion Plan. A lifetime mortgage is the product that is the most popular in the equity release range.

Over the years, equity release has received lots of regulatory influence and innovation by mortgage lenders which has resulted in the creation of some product features in this space.

An equity release mortgage provides you with a lump sum (or smaller chunks) with no requirement to pay monthly payments. It can be used to release tax-free cash from your property for various reasons without the need to sell it.

Traditionally the interest on the capital rolls up and the plan is usually repaid on death or when the sole or second applicant goes into long term care.  Changes in the industry, and a demand for more flexibility, now mean that you can make penalty free payments on all lifetime mortgages (within lender limits – usually up to 10% of the amount borrowed can be paid each year before penalties apply). This means that, if you can afford to, you can pay the interest (and more) monthly, just like an interest only mortgage so that the amount you owe doesn’t increase over time.

We are proud to be registered members of the Equity Release Council, adhering to the standards they have set.

To understand the features and risks, ask for a personalised illustration. Equity Release may come in the form of a lifetime mortgage or home reversion plan.

A lifetime mortgage may impact the value of your estate and it could affect your entitlement to current and future means tested benefits. The loan plus accrued interest will repayable upon death or moving into long term care.

A home reversion plan involves selling all or part of your home to a plan provider in exchange for a tax-free lump sum.

My interest only mortgage is ending, what can I do?  

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If your interest only mortgage is ending, you may need to switch to a repayment mortgage or consider alternative options, such as equity release, via a lifetime mortgage or a home reversion plan. There may be other product types available for you also such as a retirement mortgage.

What is a retirement interest only (RIO) mortgage?  

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A retirement interest-only mortgage, also known as a RIO, is an interest-only mortgage aimed at older borrowers who can afford to make interest payments per month.

Like a regular mortgage, with a RIO you’ll need to provide details of your income and prove to the lender that you are able to afford to make the interest-only payments per month. A RIO is available for both working and retired clients who are looking to remortgage or purchase a new home.

If you’re doing a RIO in joint names, the income will generally be assessed based on which of you would have the lower income if the other died to ensure that they can afford the mortgage on their own. A RIO mortgage doesn’t have an end date and the capital is repaid when the second applicant goes into long-term care or dies, usually from the sale of the home.

What is a term interest only (TIO) mortgage?  

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A term interest-only mortgage, also known as a TIO, works in a similar way to a RIO. A TIO is available to both retired and working applicants and can be used to remortgage or purchase a new home. You’ll pay interest-only payments per month.

Unlike a RIO, a TIO will have a set term of up to 30 years. At the end of the term, a TIO can then be repaid from the sale of the property or via the funds raised from a Lifetime Mortgage. A TIO is a great product that can be used to find the gap between a regular and a lifetime mortgage product to save interest rolling up.

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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