Retirement Mortgage

Discover: Retirement Mortgages & Why You Need One
Contributors: Nicola Date, Katherine Read. Edited by Rachel Wait & Reviewed by Francis Hui
Are You Retired & Looking to Supplement Your Income? Discover What You Must Know About Retirement Mortgages, How They Work & if They’re Right for You.

Are you a homeowner older than 55 and desperately looking for financial aid to serve you in retirement?

Do you think it’s impossible to get a mortgage because of your age?

Well, we’ve got some fantastic news. If you’re an older homeowner in the UK, you have some serious options.

In fact, the UK is one of the few countries globally that offers mortgages to retirees.

In 2021 alone, retirees in the UK unlocked over £4.8bn of property value through various retirement mortgages. But, do you qualify?

Let’s discover:

  • Retirement mortgages available in the UK in 2022.
  • How to find a retirement mortgage.
  • Reasons you may want a retirement mortgage.

EveryInvestor is here to support you.

Therefore, we’ve done a detailed analysis of the retirement mortgage industry and compiled this easy-to-read report.

Here’s what we’ve found!

Before You Start Reading….

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Mortgages for Pensioners: I’m over 65. Can I Still Get a Mortgage?

Yes, you can still get a mortgage if you’re over 65, but it may not be a traditional one.

While you likely won’t qualify for a traditional mortgage at 65, the great news is that retirement mortgages might be available to you.

However, they’re only available for homeowners and not those looking for a new mortgage.

Luckily, 74% of UK retirees1 over 65 own at least one property.

If that’s you, you can unlock the cash in your home with a retirement mortgage, with only making small or no payments in your lifetime.

What Is a Retirement Mortgage?

A retirement mortgage is a loan against the value of your estate that’s designed for homeowners over 55.

Depending on the plan you select, you may have only to pay back the interest.

But, the loan amount is repaid when you die or move to a long-term care facility.

Types of Retirement Mortgages in the UK

The 3 types of retirement mortgages in the UK:

  • Lifetime Mortgage Equity Release
  • Home Reversion Equity Release
  • Retirement Interest-Only Mortgage

Here’s more information:

Lifetime Mortgage Equity Release

Lifetime mortgages are vastly the most popular type of retirement mortgages in the UK.

They are designed for homeowners over 55 to unlock tax-free cash tied into their property while still living there.

Plans can be taken out as an individual or as a couple.

What’s unique about the lifetime mortgage is that you only need to repay the loan and compound interest when you die or go to a care home2, usually from the sale of the property in question.

The money you release from a lifetime mortgage can be in the form of a lump sum, through a lump sum with a drawdown cash facility, or a monthly income like a salary.

Home Reversion Equity Release

A home reversion plan is another form of equity release designed for older homeowners, usually those above 65.

With these plans, you’ll sell a portion or all of your property below market value in exchange for tax-free cash.

When the last homeowner (in the case of a joint plan) dies or relocates to a care facility,

The home is sold, and the lender will collect their portion, benefiting from the full value and rising housing prices.

Retirement Interest-Only Mortgages (RIO)

A retirement interest-only mortgage is the newest was designed to prevent interest from compounding, meaning that you’ll only owe the loan amount when your home is eventually sold.

With an RIO mortgage, you’ll be required to repay the monthly interest, so affordability checks will be required.

This is different from other retirement mortgages, where repayments are completely voluntary.

How Do I Choose the Right Later Life Mortgage for Me?

The way to discover the best retirement mortgage options for you and your family is to speak to a whole market financial adviser.

Once you’ve discussed your needs with your adviser, they will review the products currently on the market and help you determine the best option.

While retirement mortgage lenders often provide in-house advice, we always recommend a whole market adviser to give you a broader picture of the industry.

How Can I Increase My Chances of Getting a Mortgage over 50?

Your best chance of getting a mortgage over 50 is to wait until you are 55 and qualify for one of the retirement mortgage products.

If you have a poor credit history3, you’ll have more chance of qualifying for an equity release plan than you would a retirement interest-only mortgage.

Finally, to qualify, you’ll need to ensure that you have a small or no outstanding mortgage.

Which Lenders Offer Retirement Mortgages?

There is a large range of leading UK-based companies that offer retirement mortgages. These include Aviva, Liverpool Victoria, Hodge, Key and Age Partnership.

5 Reasons for Getting a Mortgage as a Pensioner

Unlocking equity from your home is a big move, so it’s essential to have a plan as to how you intend to use the money.

Does a retirement mortgage sound like a great option for you?

The great news is that you can use the tax-free income in any way you wish. Here’s some inspiration:

  • Pay off your existing mortgage – By doing so, you never have to worry about those costly monthly payments.
  • Renovate your home – Increasing the value in the process.
  • Give an early inheritance – This way, you may be in a position to avoid inheritance tax.
  • Go on a dream trip – After all, life is too short not to.
  • Pay for care – Live at home with a carer instead of moving into a home.
  • Pay for daily expenses – It’s a great way to supplement your retirement income if you don’t have the means to survive or thrive.

Do Lenders Have a Maximum Age Limit for Retirement Mortgages?

Some lenders have a maximum age for retirement mortgages, while others don’t.

Age limits can range between 75 and 95, but your financial adviser can help you find a plan within your age bracket.

Is It Easy for a Pensioner to Get a Retirement Mortgage?

Yes, pensioners can qualify for retirement mortgages. If you own a home and you’re over 55, you should qualify.

If you want to opt for a retirement interest-only mortgage, you must present proof of retirement income, but a private pension will suffice.

How Much Can You Borrow When You’re over 55?

Borrowers over 55 can unlock between 25% and 65% of your property. The amount you can unlock will depend on your age, your property value, and the condition of your health.

Common Questions

How Does Retirement Mortgage Work?

Is A Retirement Mortgage A Good Idea?

Do I Qualify For A Retirement Mortgage?

In Conclusion

Retirement mortgages offer an incredible opportunity for homeowners over 55 to unlock the financial freedom needed in this tough economic climate.

It’s important to note that a retirement mortgage can impact your means-tested benefits, so this is important to discuss with your financial adviser.

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Editorial Note: This content has been independently collected by the EveryInvestor advisor team and is offered on a non-advised basis. EveryInvestor may earn a commission on sales made from partner links on this page, but that doesn’t affect our editors’ opinions or evaluations. Learn more about our editorial guidelines.