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Later-Life Mortgages

Can I remortgage my home in later life?

  • Later-life mortgages used to be a product only sold by Nationwide. However, other providers are also now offering mortgage products designed for those in later life stages.

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Scour the market and compare mortgage options

Your mortgage is likely to be your biggest financial commitment, so shopping around for the best deal is vital. We can help by comparing thousands of products from a wide variety of lenders, covering the whole of the market. This way, you can be confident you’re getting the right deal.

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What are later-life mortgages?

There is no hiding that, as you grow older, it might be challenging to find a mortgage deal that satisfies your plans and needs or meet lenders' strict eligibility criteria.

However, a later-life mortgage can often represent a handy way of borrowing money into retirement. You can usually do this by releasing some of the value in your home while still living there.

There are several different types of later-life options, from lifetime mortgages to home revision plans, which are structured in different ways. That said, they all have the same goal to help you fund your later years. You might choose to make monthly repayments to pay off the loan or just to cover the interest.

There are also options such as equity release, where you don’t make regular payments. However, the money is repaid from the sale of the property when you die or move into long-term care.

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Why might I need a mortgage in later life?

Despite planning and saving, you may realise there’ll be a shortfall in retirement that will prevent you from living the lifestyle you want.

It’s not uncommon for individuals to own a property and yet not receive enough pension income. Likewise, some people may not be able to draw on enough savings to live comfortably day-to-day.

Another example would be when a homeowner comes to the end of an interest-only mortgage deal, but then doesn’t have enough of a lump sum available to pay off the capital.

Later-life mortgages could be considered to free up some extra cash while allowing you to stay in the family home.

How do later-life mortgages differ from regular mortgages?

While regular mortgages are typically for homeowners to buy a place to live, later-life mortgages are usually taken out to free up cash to fund your lifestyle.

Many of the fundamentals are the same. The bank will want to know there is enough value in the property to cover the amount it is giving you. It will also want evidence you can afford the monthly payments, such as proof of income (if applicable).

However, while those on a standard mortgage will make repayments to own more of the property outright, a later-life mortgage will see the property used to pay off the capital when you die.

What is a lifetime mortgage?

A lifetime mortgage allows you to unlock the value in your home as a tax-free lump sum of money. They can be structured in different ways:

  • No monthly payments: Rather than making monthly payments, the interest is added to the loan. The full amount is then repaid when the borrower moves into long-term care or dies. How much you can borrow will depend on your age and on the property’s value

  • Interest-only: The loan is again taken out against the value of your home, but you pay interest every month. The capital is then repaid when you move into long-term care or die. It’s like a standard interest-only mortgage, meaning you need to show you can afford the instalments

  • Capital and interest: You pay back both interest and capital every month much like a standard repayment mortgage. You should repay your mortgage in full by the end of your term. The main difference is that you can borrow up to a higher age than on a standard mortgage

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What is a home reversion plan?

Not a mortgage, but another form of equity release that works in a similar way to a lifetime mortgage.

With a Home reversion plan, you sell part of your home to the plan provider, but are then allowed to stay there rent-free until you die.

The provider will pay you a tax-free lump sum at below market value. When the property is sold, the proceeds are split depending on the percentage share of ownership.

What are the risks of borrowing in later life?

It’s not a decision to be taken lightly. While taking out a later-life mortgage or equity-release product may provide you with much-needed cash, it can be expensive.

You will be offered below market value for the property because you’ll continue to live there. This way, you’ll effectively tie up the bank’s new asset for a period.

It’ll also mean you’ll have less to leave to your loved ones. What’s more, the lump sum provided can affect any state benefits or local authority grants you receive.

It’s important to check the details of the deal too. If you’re not paying off the interest on a lifetime mortgage, it will build up over the length of the deal.

There is also the unpredictability of knowing how long you will live in your home. So, it can be difficult to assess exactly how much you’ll need. This is where releasing equity in chunks can be advantageous.

If you need to make monthly repayments, you also need to be sure you’ll have a steady income.

Finally, it’s important that you take advice and opt for the product that is right for you. It would also be worth speaking to your loved ones first.

What are the alternatives to borrowing in later life?

All mortgages incur interest, meaning you will end up paying more than you initially borrowed.

So, before opting for later-life mortgages, there are other options worth considering. These include:

  • 1

    Using any available savings

  • 2

    Downsizing to a smaller home and spending the extra money on living costs

  • 3

    Looking to your family for support

  • 4

    Seeing if you can get a local authority grant

Compare equity release mortgages

Find out more about how an equity release works, understand the pros and cons, and gain direct access from experienced advisers with our partners Fluent Mortgages.

For anything else, using a mortgage comparison tool can help you get a good idea of the kind of mortgage deals available. When you enter your information into MoneySuperMarket’s mortgage comparison tool, you’ll be able to compare example mortgage quotes from different providers.

Just tell us a bit about yourself, your financial situation, and your plans. We’ll help you scour the market in search of the mortgage deal that is right for your pockets and requirements. Then, feel free to use our mortgage calculators to find out how much each deal would cost you overall.

Your home may be repossessed if you do not keep up repayments on your mortgage.

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Later-life mortgages are aimed at those in or nearing their retirement years. You’ll usually need to be receiving a pension and your property must be your main home.

More recently, banks and building societies have raised the upper age-limit for a later-life mortgage or not set one at all.

As you get older, you may find it more challenging to find and take out a mortgage that is right for you. Not only is it more difficult to be accepted, but you may only be offered shorter-term deals.

This is because lenders may be more concerned about your ability to repay your debt. If you’re close to retiring but haven’t yet done so, lenders will not be able to assess exactly how much income you will receive from your pension.

What’s more, as you reach later life, there is an increased risk of ill health. This is often a concern for lenders, as you may end up not living to the end of your mortgage term.

If you’re looking for a mortgage to buy a new home, the criteria often become stricter as you get older. This is because banks see that your earning potential is starting to dwindle.

But don’t worry – it is still possible to get a mortgage when you’re over 50. If you are looking to remortgage your existing home, later-life mortgages could be an option.

First things first, it may be wise to seek advice. It will be handy to have personal information prepared, such as your income details from any pensions, details about any savings, outstanding debt, or insurance policies you have.

You can also explore equity release options with our partners Fluent Mortgages here.

There are several steps you can take to improve your chances of getting later-life mortgages. One of the best ways to do this is to have evidence of pension payments or other sources of income, such as investments.

Another thing you could do to maximise your chances is to try to reduce your debt-to-income ratio, as you’re more likely to receive competitive offers if you have no outstanding debts.

Finally, seeking advice from a mortgage broker can also be a wise choice. They will know the market inside out, meaning that they can point you in the right direction and help you find the best later-life mortgages available to you.