Mortgages For Over 60s

Mortgages for over 60s are available. However, the rules and criteria surrounding lending into retirement differ from a mortgage that you intend to pay off before retiring.

Age itself is rarely the blocker. What lenders actually assess is whether the income paying the mortgage will still be there for the whole term, so a 25-year term taken at 62 has to be affordable on your pension, not just on today's salary.

Most lenders cap the age you can be at the end of the term at around 75, with some going to 85. Pension income counts, including the State Pension, as do investment income and work you can evidence as sustainable.

The practical consequence is a shorter term, which means higher monthly payments, and that, rather than your date of birth, is usually what decides how much you can borrow.

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Key takeaways

• Borrowing into retirement is possible if you can evidence your retirement income.
• Most lenders do not lend beyond age 75. However, some will lend up to 85 in exceptional circumstances.
• You can use your pension income, including state pension, to evidence affordability.
• If you intend to carry on working beyond retirement age, the lender will take an opinion on whether it is sustainable income.

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Mortgages for over 60s

Mortgages for over 60s have been altered since the Mortgage Market Review (MMR) was introduced in 2014 by the FCA. MMR updated mortgage regulation in the UK with an aim to improve affordability and sustainability of mortgage lending.

It required lenders to take more care in assessing borrower's ability to make repayments. This meant more affordability checks for all borrowers.

The MMR changes meant that any lender considering mortgages for clients that stretched into retirement would also need to verify their applicant’s retirement income. Previously, the applicant chose their own retirement age without consideration for whether it was sustainable or not.

For example, working until 75 in a labour intense job might not be sustainable.

The MMR changes meant all new mortgages for the over 60s were impacted. That could be due to affordability issues, lack of income proof, or where the chosen method to borrow may not be the right outcome for the applicant to consider.

Applying For A Mortgage For Over 60s

When you approach a Mortgage lender, one of the questions you will be asked is when do you intend to retire? The lender will use the age you provide to determine what maximum term they can consider using your income pre-retirement. For example, income from employment.

If you intend to borrow into retirement, after your stated retirement age, you will only be able to borrow money based on your retirement income. For example, pension income.

You will need to provide evidence. If you cannot, the lender will not consider the income allowable for the application.

Once the Mortgage term goes beyond your retirement age, the case is known as Lending into retirement.

Some lenders set their own age when lending into retirement rules must be followed. It is usually the same age as your state pension age.

However, they will take the earliest of either your intended retirement age or your state retirement age. This will determine how your mortgage application is assessed.

Once you decide you are looking to raise or extend your mortgage into retirement, you can speak to a Mortgage adviser. The Adviser will agree a Mortgage Promise for you.

This confirms the amount you will be able to borrow, over the maximum term, based on your retirement income.

If you are moving home, you will then be able to put an offer in on a property and follow the usual homebuyer steps until completion.

If you are raising money from your property for another reason, depending on whether there is conveyancing work that needs to be completed, the Mortgage adviser may be able to agree the further advance on the same day. In some cases, it is possible to be paid on the same day also.

Over 60s Mortgage Scenarios

We have considered some scenarios below why you may need to get a mortgage that lends into retirement and how to get started.

Moving home for Over 60s

If you are planning on raising a Mortgage on a new property you are buying, you will be able to apply for a standard mortgage. To do this, you will need to verify your income beyond retirement and could look to borrow up to a maximum age of 85.

Home improvements/One-off purchase for Over 60s

If you own your home outright, you can raise a new mortgage following the same affordability rules as moving home. You will need to verify your retirement income and can only borrow up to the age of 85.

However, as you do not have an existing mortgage on the property, you will be required to do some legal work (conveyancing) to put this Mortgage in place. This conveyancing work can cost up to £1,000.

Due to these additional costs, It might be more suitable to look at a personal loan, which could work out cheaper when you factor in the upfront costs.

Further Advance for Over 60s

If you do have a Mortgage, you can consider a further advance – that is where you open a second sub-account on your Mortgage and you pay it back monthly as part of your normal repayments. Normal lending into retirement rules will apply.

Remortgage for Over 60s

The other option to consider is a Remortgage. A Remortgage is where you move your Mortgage to another lender and as part of this, you may be able to borrow extra funds at the same time.

Lending into retirement rules will apply, but you will be able to review Mortgage options from other lenders than your existing one if you choose to Remortgage. This might be a good solution if your current lender does not offer Mortgages for those over 60, or lending into retirement.

Remortgaging Into Retirement To Lower Your Repayments

If you have not paid off your Mortgage but want to retire, you may not be able to afford to maintain your current repayments based on your retirement income. However, it may be possible to stretch your Mortgage term further into retirement to help lower your repayments.

You will pay more interest in the long term, but it will allow you to retire and stay in your home.

Whether this is achievable or not will depend on the amount that remains on your Mortgage and your retirement income. Use the calculator below to see how the monthly repayment changes as you adjust the term: a longer term lowers the monthly cost but increases the total interest you pay.

Boosting Your Retirement Income

It is not normally an acceptable reason to borrow money on a Mortgage to put into a pension or maintain lifestyle costs as you will be paying interest that might offset any benefits. However, you can consider Equity Release.

With Equity Release, you do not need to pay back your borrowing until when you pass away. Upon death, the money you owe will be taken from your estate as either a percentage value of your home or a loan amount plus interest.

Income proof for Mortgages For Over 60s

Lenders will assess your affordability for your over 60s mortgage based on what income evidence you can prove.

Acceptable retirement income includes:

• State pension
• Workplace or Private Pension
• Investments
• Property income
• State benefits
• Income from a job – if the job is deemed sustainable into retirement, it can be considered

To evidence this income often only 3 months worth of Bank statements or annual benefit income statements would be required.

If you haven’t yet retired, you will be able to provide your pension estimation statement. It needs to confirm your expected retirement age, estimated retirement pension pot, and estimated retirement income.

Are Mortgages For Over 60s More Expensive?

Age does not play a role in calculating what Mortgage rate you are eligible for. You may find that raising a mortgage later in life is not as expensive as you thought it would be. However, the costs do vary from lender to lender and depend on what type of Mortgage you agree to.

What Are The Age Limits for Mortgages?

Generally, for raising a standard Mortgage, the maximum age of the oldest applicant on a Mortgage can be up to 85. There are other options you consider if this is not suitable.

What happens if you pass away before your mortgage is cleared?

Most people think that the debt will be written off upon death. However, that is not the case.

The lender will either need to be paid directly from the estate, or from family members. If they cannot raise the money a house sale may be required. This can add additional stress to what is already a stressful situation.

It is a good idea to review your Protection insurance options available to you if you do proceed with lending into retirement. It is possible to insure yourself for an amount that would clear the debt upon death so that your family does not need to worry.

Can You Get a Mortgage if You're Retired?

It is possible to get a mortgage if you're retired, but you will need to be able to prove you can afford it. You can do that by evidencing your retirement income, such as pensions. Many lenders will consider lending up to age 75.

Seeking advice On Mortgages For Over 60s

Lending into retirement is very much possible, but the rules are more nuanced than a standard mortgage and vary widely between lenders. A specialist adviser can confirm which lenders will accept your retirement income, how far into retirement they will lend, and whether a mainstream mortgage, a further advance, a remortgage or equity release is the best fit for your circumstances.

If you're weighing up releasing money from your home in later life, it's also worth reading about releasing equity for retirement and how it compares to a longer mortgage term.