Taking out a mortgage in retirement
Because mortgages are long-term loans, it should come as no surprise to find that as you get older, you pose more of a risk to lenders. The good news is that this is beginning to change as people's life expectancy increases and the retirement age continues to rise, meaning it's not impossible to get a mortgage in retirement, merely trickier.
Can I get a mortgage once I’ve retired?
Possibly, yes. Although it's true that mortgages in later life are more difficult to obtain, the problem tends not to be affordability, but the rather inconvenient fact that many lenders still have an upper age limit (usually somewhere between 65 and 75) for the point at which their loans must be repaid.
So how can I get a mortgage in later life?
- The first thing you’ll be asked to do is to prove your income. Mortgage providers like to see regular income from investments, pensions or insurance policies.
- Next, work out exactly what it is you need, like a fixed rate or variable rate loan.
- Now contact a mortgage broker or professional general financial adviser. This will save you time as they’ll have access to lenders who are more open to older borrowers. And our recommendation would be, if at first you don’t succeed, do consider trying another adviser – mortgages for older people are something of a specialist area.
- You may find it harder to get a loan, as you pose a higher risk to lenders: there are longevity issues surrounding your age, but that doesn’t mean you won’t eventually find a deal.
Mortgages for the older borrower do exist but they are subject to stringent affordability checks and you will probably need a larger deposit than other borrowers.
If you’re already a homeowner and looking to release a lump sum from your home, you could consider equity release. One form of equity release is a lifetime mortgage which is a loan secured against your home. You can release funds from the value of your home whilst continuing to live there for the rest of your life (or until you move into long-term care). Ultimately, taking out any type of mortgage is a huge commitment so just be sure it’s what you really want at this time of your life.
Is there anything else I should think about?
We’d recommend talking to your close family before taking out a mortgage – whether it’s a re-mortgage or a new product. Children, in particular, may have strong views about such a serious commitment to long term debts – and there may be other ways to raise money in the shorter term.
You don't have to do this alone - we're here to help
If you are looking at ways to raise money from your property with equity release, we’ve created an Indicative Lifetime Mortgage calculator that could be helpful to you or your loved ones.
This useful tool provides an indication of the total you could release from your property, allowing an interesting insight into what a lifetime mortgage could do for you.
However, it must be stressed this is only an indicative figure and does not constitute an illustration.