It’s not unusual for people to look for different properties when they reach a certain age or retirement.
We’ve put together this guide to mortgages for pensioners to help answer some of the questions we commonly hear from elderly people looking for mortgage solutions.
Can pensioners get a mortgage?
Yes, there are specialist mortgage providers who offer flexible mortgage deals for pensioners. Many of them will not have the age restrictions as mainstream banks and building societies, which is useful for anyone nearing retirement.
There are also specific mortgage products which are aimed at elderly customers, which include lifetime mortgages and equity release
How does age impact mortgage eligibility?
While there isn’t necessarily a maximum age limit for an older person applying for a mortgage, most lenders have their own age requirements they use to cap eligibility on a mortgage.
For most lenders the age is 70, but some lenders specialise in mortgages for the elderly with a higher age limit of 85 and a few who will provide no maximum age limit.
How can older people get a mortgage?
Mortgages for pensioners aren’t much different from regular mortgages you can get any time in life, although there are a few exceptions.
Like regular mortgages, it usually comes down to a few key questions, including:
- Affordability: Can you afford the repayments during retirement?
- Deposit: What size deposit do you have?
- Credit rating: Are you considered low risk?
Before you approach a lender, we always suggest getting expert advice beforehand. At Go2Mortgage, we provide expert advice for those retired looking for a new home.
There are a few different types of mortgages available on the market for pensioners:
Equity release mortgages
Equity release mortgages act as a way of unlocking some of the value from your home after you’ve paid off your mortgage and outright own your property.
One type of equity release product is a lifetime mortgage, which is a loan taken out against your property that does not require any repayments.
Lifetime mortgages
A lifetime mortgage is a specific type of borrowing for someone above the age 55. Essentially, you take money from your property and have the interest rolled up over time without the need to make monthly repayments.
As you retain ownership of your property, you can live in your home until you die or enter long term care.
The loan value available will increase with the applicant’s age, meaning the older you are when you apply, the less time there is for interest to roll up, so the initial loan will increase.
Interest-only mortgages for pensioners
A retirement interest-only mortgage is a type of loan secured against your home that allows you to release equity from your property. You will be expected to pay the interest of the loan on a monthly basis, ensuring the balance of the loan remains level.
The remaining balance will usually be paid back from the sale of your property when you die or move into long-term care. If there is any money left over after paying your loan, this will be inherited by your beneficiaries.
Repayment mortgages for pensioners
A repayment mortgage for pensioners works in much the same way as a normal mortgage. The amount you will be able to borrow will be calculated based on your retirement income. This can include state pensions, works’ pensions and private pensions.
The mortgage balance will be repaid over the term of the mortgage in the same way as a normal mortgage would.
Short term mortgages for pensioners
Short term mortgages can be for as little as 6 months to 2 or 5 years. Lenders have their own minimum terms which will vary from no minimum to a minimum of 15 years.
If you’re an elderly person or possibly retiring, traditional lenders may not offer you a mortgage as you will no longer be receiving a traditional, steady income. If you are in this position, a short term mortgage will allow you to buy a property as the lender may think it’s less risky to only lend money for two or so years.
What is the eligibility criteria for pensioner mortgages?
The eligibility criteria for a criteria may differ depending on what mortgage you are looking to apply for, the lender and other factors.
However, in general lenders will look at:
- The type of mortgage you’re applying for
- Your health
- Your age
- Your income
- Property type
- Credit history
Are older borrowers seen as high risk?
An older borrower may be viewed as high risk simply because after retirement, you don’t have a steady income the same way you do when you’re working.
Your income is likely to decrease, which can make it difficult to assess whether or not you’ll be able to keep up with your mortgage repayments.
As well as this, older borrowers can be seen as less healthy because of their mature age – it may be assumed that they are less likely to survive the full term of a 25 year mortgage.
This is why there are specialist lenders out there, who can accommodate mortgages for different aged borrowers.
Which are the best mortgage lenders for retirement mortgages?
We’ve compiled a summary of some of the leading retirement mortgage lenders and their terms, but bear in mind that this is not a comprehensive list. The best way to find the right mortgage lender for you, is to contact our mortgage broker experts who will do the work for you and find the most suitable deal.
Santander
Santander offers both retirement mortgages and lifetime mortgages, and the age limit for repaying mortgages is 75 or when you retire, whichever comes first.
Nationwide
Nationwide has increased their mortgage age limit from 75 to 85, as the lender aims to provide more flexibility to mortgages for pensioners.
You can use the Nationwide online mortgage affordability calculator to see how much you might be able to borrow.
Halifax
Halifax has raised its mortgage borrowing age to 80, making it possible for a 55 year old to take out a Halifax pensioner mortgage on a 25 year loan.
This makes older mortgage accounts with Halifax more flexible than some other mainstream lenders who still have lower age limits.
Barclays
Barclays say the maximum age for the mortgage term-end should be either 70 years old or your retirement age, whichever comes first. However, they will consider mortgage applications for those who are retired or past their usual age limit.
They will require sufficient proof that you can continue to repay your mortgage into retirement.
HSBC
HSBC has no set age limit for repayments of mortgage loans, and instead prefers to review any potential loans for potential customers over the age of 75.
You will have to satisfy all the criteria in order to qualify for a loan, so we recommend speaking to a mortgage advisor first instead of risking being turned down.
FAQs about Pensioner Mortgages
Can I get a pensioner mortgage with bad credit?
Yes, there are a good selection of lenders out there who are willing to lend to pensioners or those retired who have a poor credit score.
Can I get a buy to let mortgage for pensioners?
Yes, you can get a buy-to-let mortgage as a pensioner, although there are some lenders who will be less willing than others to provide you with a loan.
Some landlord mortgages can’t run past a 70th or 75th birthday, while others have age limits up to 90. It’s worth shopping first and speaking with a mortgage advisor before choosing a lender.
Are secured loans available for pensioners?
Yes, there are a range of lenders who will provide secured and unsecured loans to pensioners over the ages of 60, 65, 70 and 70 to 80 years old.
As an older person there may be limitations on the loan term available, but this does not mean you cannot get a secured loan.
Am I too old to get a mortgage?
No, you are never too old to apply for a mortgage. At Go2Mortgage, we will take the time to discuss the type of property you are looking at, as well as advising you which mortgage lender is best suited for you and your current situation. Contact us today to find out how we can help you.