Reaching your sixties or seventies does not, on its own, rule out a mortgage. There are mortgages designed for later life, and traditional lenders do still lend to people approaching or in retirement.
What changes is what lenders look at. This page explains how that works, the three main routes, and what to have ready before you talk to anyone.
Age on its own is not the barrier
The products available in later life start at different ages and work in different ways:
- Residential mortgages for older borrowers are typically available from age 50, and some lenders' options run to age 80. Some options have a lifetime term.
- Retirement interest only mortgages are typically available from age 50, depending on the lender, and have no fixed repayment term.
- Lifetime mortgages are available from age 55, and there is no upper age limit to taking one out.
So the useful question is not "am I too old?" but "which of these fits my income, my home and what I want to leave behind?".
How lenders look at income in retirement
For any mortgage with required payments, the lender needs to be confident you can keep making them for as long as the loan runs. That means looking at your income now and in the future.
What counts as income
For a retirement interest only mortgage, the most common qualifying income is pension income: the state pension, a defined benefit pension, an annuity, or income from drawdown. Depending on the lender, rental, investment, business and other property income may also count, and some lenders take into account assets such as pension fund values and investment portfolios. The types accepted vary between lenders.
Couples, and the survivor question
On a retirement interest only mortgage, a joint application is assessed on what the survivor would be left with. The lender asks whether the mortgage could still be afforded if one of you were to pass away, so it looks at the income each of you would have on your own.
As an indicative guide, lenders typically work to around 4.5 times your retirement income, or on a joint application 4.5 times the lower of the two survivor incomes. For a residential mortgage for older borrowers, affordability is assessed on your total joint income, which can mean a couple is able to borrow more.
Credit history
For mortgages assessed on affordability, your credit history can affect whether you qualify and on what terms.
Your three main routes
A residential mortgage to an older age
This is a traditional mortgage designed for borrowers approaching or in retirement. It has a set repayment term, and the lender may want to see how you will repay at the end of it. On a capital and repayment basis, your monthly payment includes both interest and capital, so the debt is actually cleared by the end. Rates are normally reviewable every two to five years.
It tends to be worth considering when you have strong income, want the debt cleared, and the term works for you. Your home is at risk of repossession if you miss payments.
A retirement interest only mortgage
You agree a monthly interest payment and no capital repayment is required during the term. The balance stays level, and the loan is repaid when you sell, refinance onto another product, move into long term care, or pass away.
It tends to suit people with a reliable, evidenced retirement income who are comfortable with a monthly payment for the long term. Because payments are required, your home is at risk of repossession if you do not keep them up. Our page on retirement interest only mortgages goes into more detail, and interest only mortgages for the over 55s covers the wider interest only picture.
A lifetime mortgage
A lifetime mortgage is a form of equity release. It is not assessed on your income. How much you can borrow depends mainly on your age and your property's value, and in some cases your health and where you live. The minimum loan is £10,000 and your property needs to be worth at least £70,000.
No monthly payment is required. The interest is added to the balance and compounds, unless you choose to pay some or all of it, and the loan is repaid when the property is eventually sold. Every lifetime mortgage we advise on includes a no negative equity guarantee, so you will never owe more than your home sells for. If you have an existing mortgage, it must be repaid before or on completion, either from your own funds or from the money released.
Equity release will reduce the value of your estate and could affect your entitlement to means-tested benefits. Lifetime mortgage vs RIO compares it side by side with a retirement interest only mortgage.
Over 70: what changes
For a lifetime mortgage, getting older increases the share of your home's value you may be able to borrow. As an indicative guide, the maximum is up to 44% of your property's value at 70, up to 49% at 75, and up to 60% from age 80. Your own figure depends on the lender's criteria, your health and your property. Our page on how much equity you can release explains what decides it.
For mortgages with required payments, age limits depend on the lender, and what matters most is whether your retirement income satisfies the lender's affordability assessment.
What to have ready
None of this is needed for a first conversation, but it helps:
- Proof of your income. Pension statements and anything else you receive. Lenders look at the income you can evidence.
- For couples, what each of you would be left with if the other passed away.
- Your existing mortgage. The balance, the monthly payment, and when the term ends.
- A rough idea of your home's value. Our house prices page can help you get a feel for it.
- What the money is for, and roughly how much you need. Borrowing only what you need keeps interest costs down.
- What you want to leave behind. It changes which route makes sense.
If an interest only mortgage is ending, using equity release to clear an interest only mortgage covers one route.
What we do, and what we do not
We advise on lifetime mortgages on a whole of market basis. For retirement interest only (RIO) mortgages, term interest only (TIO) mortgages, and interest only mortgages for ages 50 and over, we also provide independent whole of market advice. We also have experience of helping clients to find residential mortgages for older borrowers.
We do not arrange home reversion plans; we refer those to sector specialists. We do not give pension advice or inheritance tax advice, and where you need either we can refer you to a specialist. Legal advice comes from your solicitor, and independent legal advice is required before any equity release plan goes ahead.
Craig will tell you when a mortgage, or equity release, is not the right answer for you. There is no charge for the initial conversation. Our advice fee is a maximum of £1,495, payable only if your case completes. Other lender and solicitor fees may apply. If you proceed with a mortgage that requires payments to be made, your home may be repossessed if you do not keep up repayments on your mortgage.
Mortgages in later life: common questions
Can I get a mortgage at 70?
It is possible, though the type of mortgage matters. A lifetime mortgage has no upper age limit. For mortgages with required payments, age limits depend on the lender, and some options run to age 80 or have a lifetime term.
Can pensioners get a mortgage?
It is possible. Pension income, including the state pension, a defined benefit pension, an annuity or drawdown income, is the most common qualifying income for a retirement interest only mortgage. A lifetime mortgage is not assessed on income at all.
How much can I borrow on a pension income?
For a retirement interest only mortgage, as an indicative guide, lenders typically work to around 4.5 times your retirement income, or 4.5 times the lower of the two survivor incomes on a joint application. Any figure is subject to a full affordability assessment and advice. Our retirement interest only calculator gives an indicative guide.
Is there a lifetime mortgage for over 70s?
Yes. Lifetime mortgages are available from 55 with no upper age limit, and the maximum you may be able to borrow rises with age, up to 60% of your property's value from age 80. Joint applications are based on the younger applicant's age.
Are mortgages for over 55s different from standard mortgages?
Some are, some are not. A residential mortgage for older borrowers works much like a standard mortgage, with a set term and full affordability checks. A retirement interest only mortgage and a lifetime mortgage are built for later life and have no fixed repayment term.
Not sure how any of this applies to your own circumstances? Craig is happy to talk it through, free and with no obligation.
Talk it through with Craig
If you want to know which of these routes is realistic for you, that is a short conversation.
Book a call with Craig or call 0113 403 5584.
