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Mortgages For Older Borrowers

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Mortgages for older people can transform your retirement with financial security.

We explain the different options, what's important to consider and the best later life mortgages available.

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Author Paul Murphy -Later Life Finance Ltd

Securing mortgages can seem more difficult for older borrowers, due to lender restrictions on retirement income and age limits. 

There is a wide range of flexible later life mortgages available providing greater financial freedom into retirement. From lifetime mortgages for over 60s, to over 70s mortgages, there are many lenders offering flexible mortgage solutions for older borrowers. 

We explore how to secure a mortgage for older borrowers and compare the top lenders. To discuss your plans with our experts, call 0800 2465119 to arrange a free mortgage review. 

A homeowner researching mortgages for older borrowers

Mortgages For Older Borrowers

Mortgages for older people consist of four main types:

  • Retirement Interest only mortgages
  • Lifetime mortgages (Lump sum or drawdown)
  • Interest only lifetime mortgages
  • Remortgages for over 60s
 

Later life mortgages have become increasingly popular among older borrowers mortgage solutions.

We explore the options available to older borrowers, including lifetime mortgages and retirement mortgages, and provide a full mortgage broker service to review the range of flexible plans available in later life. 

A family discussing mortgage lenders for older borrowers in Yorkshire

Which Are The Best Mortgage Lenders For Older Borrowers?

Finding a suitable mortgage lender can seem daunting for older borrowers, but there are a range of specialist lenders who have greater flexibility for retired borrowers. We discuss the diverse range of mortgage options in later life. Whether you need a remortgage or you want to release some equity to boost your finances, there are a wealth of flexible mortgage options for older borrowers available. 

As an older borrower mortgage broker, we compare the top lenders based on your requirements and will recommend a suitable solution. 

Mortgages For Over 60s

There are a range of specialist lenders who have greater flexibility for the over 60’s and retired borrowers. As a specialist mortgage broker for older borrowers, we are often asked, what is a lifetime mortgage for the over 60s, and receive many mortgage enquiries asking for lending percentages around how much can i borrow on a lifetime mortgage?

Later Life Finance provide a comprehensive review of all mortgage options for older borrowers. 

Our expert advisers research the whole mortgage market to secure the best solution for your needs. 

Example Mortgage For Over 60s

  • Joint borrowers aged 62 and 69
  • Existing interest only mortgage of £120,000 ending
  • Home valued at £600,000
  • Both have final salary pension income
  • Require a lump sum of £120,000 plus £10,000 for a new car 
  • Prefer to pay interest monthly and are comfortable maintaining ongoing payments
  • Solution-Retirement interest only lifetime mortgage on a 5 year fixed interest rate
  • Later Life Finance to review the plan again for them in 5 years time.
Book a free mortgage review

Mortgages For Over 70s

There are a range of specialist lenders who have greater flexibility for the over 70’s and retired borrowers. 

Later Life Finance provide a comprehensive review of all mortgage options for borrowers over 70. 

Our expert advisers research the whole mortgage market, including lifetime mortgages for over 70’s, to secure the best solution for your needs. 

Example Mortgage For Over 70's

  • Joint borrowers aged 72 and 75
  • Existing interest only mortgage ending
  • Home valued at £450,000
  • Require a lump sum of £80,000 plus £10,000 for home improvements 
  • Would like access to a drawdown facility for the future 
  • Prefer to pay interest monthly but don’t want any contractual commitment for security and peace of mind
  • Solution-Drawdown lifetime mortgage with voluntary repayments to manage the interest. Access to a lump sum with £50,000 drawdown facility for future use, if needed. 
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Mortgages For Over 80's

There are a range of specialist lenders who have greater flexibility for the over 80’s and retired borrowers. Being an octogenarian doesn’t stop you from getting a mortgage these days! 

Later Life Finance provide a comprehensive review of all mortgage options for borrowers over 80. Our expert advisers research the whole mortgage market to secure the best solution for your needs. 

Example Mortgage For Over 80's

  • Single borrower aged 80
  • Mortgage free home, valued at £500,000
  • Requires a lump sum of  £50,000 for home improvements and to gift an early inheritance to their daughter.
  • Would like access to a drawdown facility for the future 
  • Prefer to pay no payments 
  • Solution-Drawdown lifetime mortgage with access to a lump sum with £50,000 drawdown facility for future use, if needed. 

What Type Of Mortgages Can Older Borrowers Get?

Retirement Interest Only Mortgages

With a Retirement interest-only mortgage (also known as RIO) the interest is paid off monthly, and the full amount of the loan is to be settled upon the death of the borrower or when they vacate the property.

This type of later life lending product differs from lifetime mortgages, as retirement mortgages involve fixed monthly payments, whereas lifetime mortgages do not.

RIO mortgages can raise up to 60% of the value of your home based on your income, whereas a lifetime mortgage is based on your age. 

To qualify for a retirement mortgage, an income assessment is required, consisting of employed or self-employed income, pensions, and investment income.

There is a risk of default if the repayments of the retirement mortgage are not met, and unlike a lifetime mortgage, RIO’s are not protected by the Equity Release Council codes of conduct. 

How Much equity can i release?

Equity Release Mortgages

Equity release mortgages allow homeowners over 55 to borrow tax-free equity against their property with optional repayments. 

The mortgage is settled when the homeowners pass away or go into long term care. 

Features of equity release mortgages include:

  • Voluntary repayments mean compound interest can be avoided or reduced to help preserve more equity for your beneficiaries, or for downsizing and settling the mortgage and buying another home.  
  • No negative equity guarantee for Equity Release Council members ensures you will never owe more than your home’s sale proceeds; protecting you and your family. 
  • Possible to port (move) the lifetime mortgage when moving to a suitable property, or sell property and repay debt with sale proceeds (subject to exit fee’s)
  • Downsizing protection to repay without any exit fees if you move home and settle early 
  • An equity release mortgage offers lump sum or drawdown options, voluntary repayments and fixed exit fees for early settlement 

Get your free calculation & explore flexible mortgages for older borrowers

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Lifetime Mortgages

Lifetime mortgages are the same as equity release mortgages. 

However modern lifetime mortgages include a range of new features:

  • Interest only lifetime mortgages allow regular repayments
  • No exit fee lifetime mortgages are available for flexibility

Interest Only Lifetime Mortgages

An interest only lifetime mortgage enables monthly interest repayments on a voluntary basis. 

This means you don’t need to prove your income to qualify. 

Drawdown Lifetime Mortgages

Drawdown Lifetime mortgages include a range of features for flexible borrowing:

  • Lump sum with access to a reserve drawdown facility for flexible borrowing
  • Interest is only charged on money drawn down
  • Option to make interest payments on the full sums drawn

Mortgage Brokers For Older Borrowers

As a specialist mortgage broker for older borrowers, Later Life Finance provide a comprehensive review of all mortgage options for older borrowers. Our expert advisers research the whole mortgage market to secure the best solution for your needs. 

Summary

There are many factors to discuss when considering whether a mortgage for older borrower is suitable for your plans. 

Later Life Finance provide a comprehensive review of all your equity release options. Our expert advisers provide detailed illustrations and projections to assist you with understanding the effect of raising money from your home on your estate. 

We provide professional insight into how to manage the optional interest payments, and how this will affect your estate in comparison with making no payments. 

Lifetime mortgage FAQs

The amount you can release on a lifetime mortgage is usually between 20% and 50% of the home's valuation. This is based on the age of the youngest homeowner and the property type.
If you need to raise more money and have no remaining Drawdown (reserve) Facility, you may be able to take a Further Advance from your lifetime mortgage. This is additional borrowing on top of your existing lifetime mortgage and is subject to the valuation of your home and the balance on your lifetime mortgage.
Equity release companies who adhere to the Equity Release Council codes of conduct offer the option to transfer your lifetime mortgage to a new property if you decide to move. However, certain conditions must be met for the new property to be considered "suitable." A suitable property refers to one that is deemed marketable by the equity release company in the future. For instance, if the new property is located in a flood-prone area, the transfer of the lifetime mortgage may not be permitted. In the case of downsizing to a property of lesser value, you might be required to repay a portion of your lifetime mortgage to facilitate the transfer.
In the case of a lifetime mortgage, you generally do not need to make monthly repayments since the loan, along with the accumulated interest, is settled when your home is eventually sold. Your lifetime mortgage adviser will provide detailed projections of how much you will pay back based on whether you opt to make payments or not.
In the event of you passing away shortly after obtaining a lifetime mortgage, the interest accrued would not have significantly accumulated, resulting in a smaller growth of the debt. If no other homeowner is listed on the lifetime mortgage, the lender requires the mortgage to be settled within 12 months of you passing away. The executors of your will sell the property and utilise the proceeds to settle the debt. The beneficiaries of your estate may opt pay off the debt using cash or a new mortgage and retain ownership of the property. This will depend on factors including your wishes set out in your will, and on whether the property is to be retained or sold, with any remaining equity divided by your beneficiaries. 
Equity release lenders who are a member of the Equity Release Council provide a no-negative equity guarantee. This ensures you will never be required to repay more than the proceeds from the sale of your home to settle the debt. In other words, the lender cannot pursue you for any shortfall between the debt amount and the sale proceeds. This protection is made possible by the no negative equity guarantee, which is upheld by all members of the Equity Release Council. According to this guarantee, the lender is strictly limited to requesting only 100% of the sale proceeds as repayment. They are not permitted to seek additional payment from you, your estate, or your estate beneficiaries.
A typical rate for a lifetime mortgage typically falls between 5.9% and 7%. That said, your rate may be different depending on factors like your loan-to-value ratio and the features included in your plan. It’s important to compare the features of different plans to find the one that best fits your needs.
Lifetime mortgages come with a few risks, such as the possibility of owing more than the value of your home due to accumulated interest. They also require monthly fees and can significantly reduce the amount of inheritance you can pass on to family members. Ultimately, it’s important to consider all of these factors when deciding if a lifetime mortgage is the right choice for you.
Lifetime mortgage interest rates are typically based on your age, the amount of money you need to borrow, and the value of your property. Generally speaking, the older you are and the less you borrow, the lower the rate you can expect. Drawdown lifetime mortgages have interest rates set at the time of further borrowing, whereas the initial lump sum is determined at the time of arranging the plan. So be sure to research what’s out there before making a decision.
Yes, you can pay off a lifetime mortgage early, but there may be fees associated with doing so. Providers have varying levels of early repayment charges which your equity release adviser will discuss with you to ensure you have access to all your options and understand the features and charges. It is best to check with your provider before you decide on the repayment plan.
Lifetime mortgages come in several forms, including lump sum, drawdown and interest-only plans. Each offers different rates and repayment arrangements, so your adviser can tailor the mortgage to meet your needs. Later Life Finance provides access to the whole lifetime mortgage market. We will explain the features, costs and points to consider of each option. This will help you make a balanced decision on the right solution for you.
You can repay an interest-only mortgage with an equity release plan. Lifetime mortgages are the most popular form of equity release and allow optional repayments of interest charges, if you wish. Since monthly repayments are voluntary with a lifetime mortgage, your home is not at risk of repossession if you do not maintain monthly payments.Therefore these plans can be more suitable into retirement years.
An interest-only lifetime mortgage is a type of equity release plan where you can pay the interest off on a monthly basis. This avoids compound interest being added which stops the loan from increasing. This type of mortgage is popular for homeowners who want to maintain equity in the home for inheritance or downsizing purposes.
A senior couple discussing their options for gifting equity release funds to reduce their inheritance tax

What does Martin Lewis say about Lifetime Mortgages?

Martin Lewis explains when looking for a solution, you should always try secure the most competitive interest rate, which is something Later Life Finance can guarantee.

Martin Lewis recommends anyone with an existing lifetime mortgage should check if they are eligible for a more competitive interest rate, and how much equity can you can release.

Read more

What Happens When Your Interest-Only Mortgage Ends?

When your mortgage term is ending, your current mortgage lender will require a repayment plan. Assuming there are no repayment methods available, firstly, they will discuss the option of converting your lending to a repayment mortgage, however this option can prove expensive compared with interest mortgage payments.

Secondly, mortgage lenders will ask you whether you have considered downsizing, and thirdly they may suggest considering a later life mortgage, such as a lifetime mortgage.

Read more
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