The demand for mortgage products for older borrowers is growing and with lenders now more willing to lend to this age group, now could be the time to explore new ways of funding your retirement years.
A retirement interest-only mortgage is specifically designed for those over the age of 55 and for pensioners. The loan is secured against your property and can help fund your retirement lifestyle by repaying debts, carrying out home improvements or making lifetime gifts of money to children. In contrast to a standard interest-only mortgage, the amount borrowed doesn’t have to be repaid until you die or move into long-term care. But you will need to prove that you can comfortably afford the monthly interest payments during your retirement years.
The amount you can borrow is based on an affordability assessment carried out by your lender to ensure you will be able to afford the monthly payments after retirement when your sources of income are likely to be from pensions, savings and investments.
This type of mortgage works well for retirees as the loan term isn’t fixed, and there is no need to demonstrate how the mortgage will be repaid, as repayment will come from the eventual sale of the property. Some products, however, do allow borrowers to repay some of the capital as well as paying the interest on their loan. There is no roll-up of interest, meaning that it’s more likely that there will be something left following the eventual sale to pass on as an inheritance.
Retirement mortgages are a major financial commitment and it makes sense to talk to us about your specific circumstances and needs so we can find you the best available options.
A mortgage is a loan secured against your home or property. Your home or property may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.