Can I still get an interest only mortgage even though I am retired?
Yes - It is a popular misconception that once retired you are unable to obtain a mortgage but this is wrong, providing your pensionable income or alternatively your age and property value is sufficient.
Obviously it is important that any borrowing should remain affordable just on your pensionable income.
We have access to a couple of mortgage lenders who are still willing to lend interest only mortgages to people already retired. However even if you feel the payments would remain affordable, there are potential drawbacks to using such schemes for equity release. These include:-
- Most ordinary lenders will expect the mortgage to finish by the time you reach 75 or 80. Therefore if you do a repayment mortgage, due to the short term, the monthly repayments could be too expensive for you, or if you did an interest only mortgage, either you would have to downsize or look towards an equity release scheme to release enough to pay back the mortgage lender at that time and/or possibly provide you with some additional money. Of course the future availability of such schemes to pay back any mortgage cannot be guaranteed to be available in the future.
- The amount you can borrow on ordinary mortgages either starting only after retirement or go beyond retirement, will normally be determined by how much your post retirement income will be with lenders applying either a multiplication of your joint projected retirement income or on affordability. This may not be sufficient for your needs.
What is an Interest Only Lifetime Mortgage?
An interest only lifetime mortgage unlike ordinary interest only mortgages will give you the right to remain living in your home for the rest of your lives providing you keep up repayments and one of the lenders, even allows you to stop making repayments of interest on either part, or all, of the mortgage, at anytime if you decide you can no longer afford the repayments.
If you decide to do this, the interest will then accumulate on a roll up basis, meaning that from that day forward the debt you would need to repay on last death or move into care would become greater. If you would like to read more about interest only mortgages which run for the rest of your life, please see interest only lifetime mortgages.
Still don't qualify?
Should you be only 55+ or your current, or projected, gross pensionable income isn't enough to justify the amount you want to borrow, providing you still have sufficient disposable income each month to realistically afford the repayments, we also currently have a specialist equity release provider who may be able to help.
They will offer a Lifetime Mortgage on an interest only for life basis, (providing you live in England and Wales). The amount they will offer is based on your age (youngest in joint life cases) and property value, not income. They also provide you with the reassurance that should you start to struggle to pay the interest you can make a final decision to stop making repayments and roll up the interest instead.
Find out how much you could borrow?
If you live in England or Wales and would like to find out how much you could borrow on an interest only mortgage from this specialist equity release lender, please use our free equity release calculator. If you live in Scotland or simply would prefer to discuss your requirements with us, please call us on FREEPHONE 0800 970 4883
Further information
Further information about interest only mortgages is available, please visit interest only mortgages.