As you get older and closer to retirement, it can be more difficult to get a new mortgage. Residential expert, Erin Gallacher, looks at what options available to the ‘new’ generation of remortgagers.
There is a common misconception that people over 65 can not get a mortgage. I have many clients who had heard that they could not get a mortgage because of their age, but we have always been able to help them.
Increasingly, we are seeing lenders relax their criteria regarding age due to the increasing demand from the over 65’s. Most high street lenders will now lend to age 75, with some lending to age 80. Indeed, some more specialist lenders/smaller building societies have a no maximum age policy.
What are my options?
In addition to the lenders relaxing their maximum age criteria, there now multiple types of mortgage product for the older borrower. These include:
- Equity release
- No maximum age mortgages
- RIO mortgage
Equity release is where no monthly mortgage payment is made, and the monthly interest rolls up into the mortgage. This means that the mortgage balance increases month on month.
This type of mortgage would be good for a couple who have limited income and want to release some of the money tied up in their house but also did not want to leave equity in their property to their estate.
Normally these mortgages can remain for the rest of the borrower’s life.
No Maximum Age Mortgage
A no maximum age mortgage is where a lender will offer a standard mortgage to the borrower. This mortgage can be taken on either a repayment or interest only basis and taken for as many years required (subject to affordability and plausibility).
This type of mortgage would be good for a borrower who will continue to earn income into and throughout retirement, such as a landlord who has a property portfolio.
Retirement income can be used in conjunction with any earnt income.
Retirement Interest Only (RIO) Mortgage
A RIO mortgage is a retirement interest only mortgage. The RIO is designed for applicants over the age of 55. The lender would normally be looking to assess the affordability of the mortgage based upon current and or future pension income. The mortgage loan would be paid off when the borrower either dies, moves into a retirement home or moves house.
This type of mortgage would be good for a couple who are aware of their pension income and would like to use their equity in retirement.
Unlike the equity release mortgage, the lender would require a mortgage payment to be made meaning the mortgage balance will not increase or decrease.
With later life borrowing no two cases are the same and it’s important to find the right product for your individual circumstances and inheritance planning. You can do this by speaking with a broker who is qualified to discuss all of the above options. Contact our specialist team of mortgage brokers on 0345 345 6788 or email firstname.lastname@example.org for more information.