Later-life MORTGAGES

If you need a mortgage in your 50s, 60s or 70s, how easy is it to get one? Sarah Pennells tells us what types of mortgage are on offer

Many of us dream of retiring mortgage-free but the reality is that for hundreds of thousands of homeowners, the end of work doesn’t mean the end of their mortgage. If this is you, the good news is that, over the last few years, more banks will consider lending to older borrowers.

Mortgages for over-65s

Some mortgage lenders will let you take out a mortgage if you can pay it off by the time you’re 75, but others will insist your mortgage is cleared by the time you retire (assuming that comes first!). A number of banks have no upper age limit at all. But you’ll still need to show that you have enough money coming in to afford the mortgage and that can be a problem for many. Most people retire on less – sometimes far less – than they earn when they’re working. So, unless you can show that you can make the monthly mortgage payments once you’ve retired, you’ll be expected to pay it off in full beforehand.

Retirement interest-only mortgages

If you have an interest-only mortgage (where you pay the interest every month, but not the original ‘capital’ you borrowed), it can be much harder to get a mortgage that lasts until after you’ve retired. The last couple of years have seen the launch of a new product called a ‘retirement interestonly mortgage’ where you only have to make interest payments for the term of the mortgage. Some banks will set an upper age limit by when you have to pay back the capital, or it’s paid back when the house is sold, you die, or move into long-term care.

This difference is important because, unless you downsize and can release enough money to pay off your mortgage by the time you have to clear it, you could just be putting off the problem by a few years.