HOW DOES LENDING INTO RETIREMENT WORK
When borrowing money in retirement, there may be additional factors to take into consideration. The main thing being, are you able to make the repayments.
Whether you are currently retired or soon to be retired, you have to think about your future monthly income. If you’re already thinking that you aren’t going to be able to afford a mortgage, you still have a few options to consider.
Your first could be changing lender. Different financial companies will have specific policies when it comes to borrowing later in life. You may want to consider one that is flexible for your age, needs and repayment schedule.
A second option could be equity release. This allows you to take equity out of your current property to pay for what you need. The remainder of the loan is usually paid off once the property has been sold.
Another option to consider is downsizing. This doesn’t necessarily mean getting a smaller property, but also moving out of expensive areas with high council tax bands etc.
All in all, there are numerous options available for wanting to borrow money in retirement. There’s no need to panic and think once you’ve left employment that you no longer qualify.
The deal-breaker for borrowing is your income. You need to think on a basis of what you have coming in, how long you want to borrow for and how you’ll ensure everything is paid off at the end of the term.
As the retirement age is creeping further along as the years go by, some lenders are now increasing their lending age to 70. This means you can be calculated from 70 onwards, with a 10-15 year repayment schedule. Due to the nature of a shorter repayment schedule, your monthly payments may be higher.
With any mortgage application, your income combined with a credit check is the ultimate decider of your success rate.
If for whatever reason, you aren’t able to apply for a typical mortgage, you may be considered for a retirement interest-only mortgage. This will just be interest only payments until the property is sold, you go into residential care or pass away. This provides your lender with the security that the mortgage will eventually be paid off. Lending into retirement shouldn’t be a taboo subject, as it isn’t all that different. It requires a few more considerations, and having a good pension is certainly desirable.
But don’t let it put you off. Speaking to a financial advisor or mortgage broker about your options is always a great place to start.
All borrowing should be considered carefully the team at St Barts finance are happy to help you with understanding your options and explaining the types of borrowing that is available to you. For more information contact us at our head office and we will be happy to help.
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‘Your home may be repossessed if you do not keep up repayments on your mortgage.’
You will need to take legal advice before releasing equity from your home as Lifetime Mortgages and Home Reversion plans are not right for everyone. This is a referral service.