In This Article
What are mortgages into retirement?
Different lenders have different rules when it comes to lending into retirement. When you apply for a mortgage, your mortgage lender will ask the age you will be when you intend to retire.
When taking a standard residential mortgage, a lender does not like the term of the mortgage to go beyond this age, unless income in retirement is strong enough to meet the lender’s affordability assessment.
For instance, if you plan to retire at 70 but wish to take your mortgage until age 75 with no pension provisions, the lender is going to be concerned about your ability to pay the mortgage.
Lenders have different maximum ages that they allow the mortgage to run to when based on earned income. For example, some may go to 70, some to 75 and perhaps even 80 years old.
The lender would need to know what you do for a living and that your job would allow you to continue working until this age.
If your income is from a property portfolio or pension, some lenders can allow you to go to an even greater age.
You should talk with your mortgage adviser to find out what your options are if you would like to take your mortgage when you are retired.
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Do all lenders offer mortgages into retirement?
Not all lenders will offer mortgages into retirement. Some lenders want the mortgage repaid by the time the person reaches the state retirement age.
Fortunately, some lenders are happy to consider applicants that plan to work until a later age. In addition to this, some lenders are willing to lend to people that have an income in retirement to replace the earned income. Lenders may still have a maximum age, but it will depend on the individual lender as to what this is.
Your mortgage adviser will know which lenders to approach and avoid based on your age, retirement age expectation, savings and projected retirement income.
Always think carefully when you were taking a mortgage into retirement. Professional advice is always recommended.
Are equity release mortgages, and mortgages into retirement?
Equity release mortgages could be considered mortgages into retirement. They are different to standard residential and buy to let mortgages but are designed to be taken into retirement and usually for a lifetime.
The difference between an equity release mortgage and a standard mortgage into retirement is the obligation to make a monthly mortgage payment on a standard mortgage.
This will mean that the mortgage will need to be underwritten based on affordability as the mortgage payment is not a choice.
With an equity release mortgage, most products do not require you to make a monthly mortgage payment and therefore it is your choice whether you contribute towards the mortgage or not. If you choose not to, your balance rolls up.
Equity release mortgages are a specialist area so always deal with a qualified equity release mortgage adviser.
Can you get buy to let mortgages into retirement?
It is possible to get buy to let mortgages into retirement. Buy to let lenders are usually more flexible than residential mortgage lenders when it comes to mortgages into retirement.
Many retired people choose to take buy to let mortgages into retirement to have a property portfolio to contribute towards their income.
Lenders do still have rules around what age they are happy to go to but some can be very flexible indeed. Some lenders can go past age 90 with a buy to let mortgage as long as they are comfortable with the scenario.
When a lender underwrites a buy to let mortgage, they are mainly concerned about the rental income that the property will generate. The reason for this is that this rental income will be used to make the mortgage payment. A person’s age will not influence what income a property can generate.
If you are considering buy to let retirements mortgages, you should talk with a qualified mortgage adviser.
Can you get commercial mortgages into retirement?
You can get commercial mortgages that go into retirement. When you buy a commercial property with a commercial mortgage, your lender needs to know your intentions with the property. It may be that you wish to run a business from the property or otherwise rent it out to a commercial tenant.
Your commercial mortgage lender will need to be comfortable with the full situation. As a result, your age may be taken into account. This is not to say that lenders are not comfortable lending commercial mortgages into retirement, but they just need to sense check the situation to ensure that they are happy.
If you are considering a commercial mortgage into retirement, you should look for a commercial mortgage broker that can help you.
Your commercial mortgage broker will likely be a member of the National Association of Commercial Finance Brokers (NACFB).
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How do residential mortgage lenders underwrite mortgages when you are retired?
When a lender is underwriting a residential mortgage into retirement, they will need to get a full understanding of when you plan to retire and what your retirement income will be if the mortgage is to go beyond this age.
For example, if you are approaching a lender where they have a maximum age at the end of the term of 80 years old based on your earned income, they will need to know more about your occupation to ensure that working until this age is plausible.
In this situation, if you were a scaffolder, the lender would likely have a problem becoming comfortable that you will work until this age. If you were an accountant in a desk-based role, this may be different.
If you are not planning to use earned income as you plan to retire before the mortgage expires, the lender would need to know what your retirement income is to ensure you can still pay your mortgage.
For instance, if you have verification that you will receive a guaranteed pension at a guaranteed age, your lender may be able to use this to take the term into retirement.
Different lenders will treat this situation in their own individual way, so speak with an experienced mortgage adviser who can guide you on your options.
Do you need to have savings or a pension to get mortgages into retirement?
You do not always need a pension to be able to take a mortgage beyond the state retirement age. For instance, if you wanted to take the mortgage until 75, disclosing that you plan to work until then, not all lenders will need a pension proof. Some may be more likely to request this though, if you are near to retirement age now, for example, within 10 years.
If you are planning to take the mortgage beyond your retirement age, your lender would want to see proof that your pension income would be enough to qualify for the lending.
Your mortgage adviser would be able to confirm whether your pension income is enough to qualify for the borrowing that you need.
Conclusion
It is certainly possible to take mortgages into retirement, but it will depend on your plans and what your post retirement income would be.
If you plan to remain in your job until a certain age, some lenders can be flexible on this.
If you plan to retire before the mortgage term expires, but have a strong retirement income, some lenders can ignore your retirement age and underwrite on this income.
Another option for a mortgage into retirement can be equity release. Equity release is not for everybody, and you should do plenty of research before proceeding.
If you would like advice in any of these areas, I NEED ADVICE can match you with a qualified and experienced mortgage adviser to tell you what your options are.
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