What is a Retirement Mortgage?

What is a Retirement Mortgage? Retirement Mortgages in UK Explained

Retirement mortgages are a flexible way to borrow in retirement. There are many different types available based on your individual circumstances and needs with some that give you the flexibility to access the equity in your home, others that are based on your retirement income and some that even combine the two. Our team of expert mortgage advisors have access to the whole market of interest only lifetime mortgage providers and can discuss, for free and with no obligation, the best options for you. In the meantime, we have answered some of your more frequent queries about retirement mortgages in the UK below.

Can you get a mortgage if you are retired?

Yes, you can and what’s more, there are several options that we can look at that would best suit you based on your current situation, whether you are nearing retirement or are in retirement. There is a variety of interest only retirement mortgages and lifetime mortgages available for you to access that are based on your property value or your retirement income and can run for a fixed number of years, or your lifetime.

How does a retirement mortgage work?

A retirement mortgage is usually arranged on an interest-only basis and is essentially a loan secured against a property that can commence whilst in retirement. This could be for a fixed term, for example 10 or 15 years, or over the lifetime of the homeowner. During the mortgage, repayments of the capital and/or the interest (amount depending on the type agreed) will be made until the mortgage is repaid or the property sold.

What types of retirement mortgages are out there?

There are many types of retirement mortgages available to help raise finances in later life: interest only retirement mortgages, repayment mortgages, schemes where you are required to pay the interest each month and others where the interest can be a voluntary payment.

The two most popular retirement mortgage options are:

INTEREST-ONLY RETIREMENT MORTGAGES: a loan that is income assessed as borrowers must still be able to afford to pay ongoing monthly interest payments. However, you can remortgage your interest-only loan when it comes to an end – using the sale of your property to repay the debt.

– LIFETIME MORTGAGES: a loan secured against a homeowner’s property that allows release of all or some of the equity that has been built up, to afford a more comfortable lifestyle in retirement or help a family member financially. The interest is charged on what you have borrowed, which can be paid monthly, as an annual overpayment, or added onto the total loan amount (no interest payments monthly). When the home is sold – the money from the sale is used to pay off the loan.

With so many different types of schemes and retirement interest only mortgage rates based on individual circumstances, our expert retirement mortgage advisors will focus predominantly on your main priorities to find the plan that most comfortably fits your needs.

How much can a retirement mortgage offer me?

The amount that a retirement mortgage can offer you depends on your personal circumstances and priorities. If you are applying for a mortgage scheme that doesn’t require you to pay the interest, the loan amount is based on the valuation of the property and your age. If you are applying for a mortgage scheme that requires you to pay the interest monthly, the amount available depends on the valuation of the property and your income. 

Is a mortgage in retirement best advice?

Each individual circumstance requires careful consideration to establish whether a mortgage currently is ‘best advice for your circumstances’. At Private Wealth Mortgages we offer a free no-obligation review of your current situation and we’ll even visit you in person at your home if you prefer. We’ve been helping people prepare for retirement and providing impartial, expert guidance for over 20 years – so you can trust our team to assess your own personal situation, give you an honest appraisal and provide advice that allows you to maximise your income at any age.

Lifetime mortgage or retirement interest-only – which is right for me?

The answer to this question is always going to be what is best suited to you given your current situation. If you are keen to maintain or reduce the agreed mortgage balance, and this is affordable to you now and for the foreseeable future, you may prefer an interest only retirement mortgage.  Whereas if you want to use the equity in your home to release some tax-free cash to live more comfortably in your later years then you may prefer a lifetime mortgage. Our retirement mortgage advisers are specialised in both types and will recommend the best options for you before you need to decide.

Is there an upper age limit for getting a mortgage?

Most lenders have their own age limits regarding when you can take out a retirement mortgage, so for some there will be an upper age limit, but this will vary per lender. The good news is there are many lenders now offering mortgage products to those with a good deposit, a strong credit history and the means to pay off the loan – regardless of their age.

What is a mortgage retirement loan?

A mortgage retirement loan is another name for a mortgage in retirement – a flexible way to borrow in retirement using the value of your home. There are so many different types of mortgages available based on your individual circumstances and needs, so all you need to do is contact one of our specialist advisers and we can provide a free no-obligation detailed review to help you and us understand the best options for you.

What age do mortgages go up to?

Most lenders have their own age limits attached to when the mortgage term ends, but many interest only lifetime mortgage providers don’t restrict the term of their mortgages, so you are able to borrow for over the term of your lifetime.

What are the pros and cons of retirement mortgages?

The obvious advantage of securing a mortgage is that it could be a replacement for a mortgage that you no longer have sufficient funds to repay, thus avoiding having to move home or release ownership before you are ready. It is also a great way to raise some finance to top up your retirement income or release some tax-free cash to help family members, travel or improve your home. The obvious disadvantage is that you are charged interest for borrowing in retirement – whether it’s physically paid or not.  However, the rates of interest available now are very competitive and there are strict guidelines in place to ensure lenders treat customers fairly and you and your home are protected.  Also, the loan itself does not need to be an increasing debt throughout retirement as many mortgage plans allow you to overpay an amount without penalty each year.

All our plans are regulated by the Financial Conduct Authority (FCA) and the industry body ERC. So, however you are planning to finance your retirement our mortgage advisers will discuss your personal circumstances and explain all the options available to you in a way that is unbiased and easy to understand. CONTACT US today for more information on 01403 540126, visit our ‘Advice for Later Life section on our website, or email: info@privatewealthmortgages.co.uk

If you’re looking for a mortgage adviser who takes the time to get to know you and where you are in life, you’ve come to the right place.

Choosing the right mortgage for you can be really challenging. At Private Wealth Mortgages, our expert advisers guide you through the entire process and will find the best deal for your circumstances.

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Private Wealth Mortgages Ltd is authorised and regulated by the Financial Conduct Authority. FCA Number: 445980

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