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Mortgages for over 60s
Learn more about mortgages for over 60s in our guide below. Plus click the button to let our partner Responsible Life find the right equity release option for you.
Can I get a mortgage if I’m over 60?
It’s absolutely possible to get a mortgage if you’re 60 or older, it can just be more difficult than it is for younger applicants. The main reason for this is that income drops during retirement for most people, so lenders are more concerned about your ability to meet the repayments.
The good news is, lenders are starting to appreciate that we have an ageing population in the UK, with many people choosing to start families much later than was typically traditional. This means that mortgage products for the over 60s are absolutely necessary and many lenders provide a range of products specifically aimed at older borrowers.
It’s also possible to still find a mortgage lender that will approve a traditional residential mortgage for older applicants. Some lenders have a maximum age (at the end of the mortgage repayments term) of 85, which means that a 60 year old could theoretically still get a 25 year mortgage, assuming they had the deposit and income to support it.
Older borrowers will need to go to greater lengths to prove that they will be able to afford the repayments in the long term, typically providing forecasted retirement income, especially if they are nearing retirement or already retired.
How to compare over 60s mortgage deals
Work out what you need
Work out what you require from a mortgage. Do you want an equity release product or a retirement interest-only mortgage? Or are you looking for a standard repayment mortgage? Make sure to speak to an expert if you're unsure about the different mortgage available.
Contact a mortgage broker
A mortgage broker may be help advise you on the different options available. They can also help identify which lenders might be able to consider you depending on your financial circumstances.
Speak to an equity release specialist
If you are interested in an equity release product, such as a lifetime mortgage, it's best to speak to an equity release specialist. Our partner Responsible Equity Release can help you understand your options. Click the button below to get started.
THINK CAREFULLY BEFORE SECURING DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE OR ANY OTHER LOAN SECURED AGAINST IT.
How to get a mortgage for over 60s
Older borrowers tend to benefit from using a mortgage broker, as they will be able to help you sift through the lenders who are more open to older applicants. They will know what the criteria are for each of them, and therefore can save you the hassle of contacting multiple lenders and potentially being turned down.
If you look at equity release as a retirement mortgage option, it’s absolutely essential that you seek independent financial advice from a qualified equity release broker who is registered with the Equity Release Council (ERC) as they will ensure you are not putting your home at unnecessary risk.
You will typically only be able to arrange a mortgage that is repayable by the time you reach the lender’s age limit, which means that you may not achieve such a large loan as someone who could take out a longer mortgage. The maximum age varies from one lender to the next, however, and there are some who actually have no age limit at all, so be sure to compare all of your retirement mortgage options before making a decision.
Mortgage options for over 60s
If you’re not able to qualify for a standard mortgage, or if they are better suited to your needs, then there are some products specifically aimed at those who are retired and/or over the age of 60. Below we’ll look at these options in a little more detail:
Retirement interest only mortgages
A retirement interest only mortgage (or RIO) is a great option for older borrowers who are retired and looking to downsize to a smaller property or remortgage, perhaps to repay their original mortgage.
There are some general criteria that you will need to meet to qualify for this type of mortgage. You need to:
Be a homeowner
Have a minimum level of equity in your home - this varies from one lender to the next
Be 55+
Prove that your retirement income covers the interest-only repayments
Remember, each lender will also have their own additional criteria to consider.
With a RIO mortgage you only repay the interest each month and the capital (loan amount) is repaid either when you die or move into care. You can also choose to sell your home to repay the loan.
This is typically a cheaper option than equity release, however, the major difference is that you do have to service the interest, whereas equity release has no requirement for any repayments.
Equity release
Equity release products can help you to access the cash value within your home without having to sell it. However, they are very expensive products that have a number of significant risks associated with them, so you should seek expert advice before applying.
There are two types of equity release product:
Lifetime mortgages
Home reversion
However, home reversion is less popular nowadays so there are less lenders offering them. Below we'll look at the criteria and a basic outline of how these product work.
Lifetime mortgages
A lifetime mortgage lets you borrow some of the equity in your home and you won’t need to repay this in your lifetime. Instead, the capital and interest are repaid once you have passed away, or gone into long-term care.
The general criteria that you need to qualify for this type of mortgage are:
Be a homeowner
Have a minimum level of equity in your home - this varies from one lender to the next
Be 55+
A lifetime mortgage works very similarly to a RIO mortgage, but it doesn't require you to make any repayments. Again, the loan is repaid after death or when you're no longer able to live in your home. However, with compounded interest, you're likely to owe a lot more money this way than with a retirement interest-only mortgage.
This can be a problem if you were hoping to leave some of the proceeds of your property sale as an inheritance. However, the Equity Release Council's ‘no-negative equity guarantee’ means that you will never have to repay more than the value of your home, so your beneficiaries will never be out of pocket.
You can choose to make partial or full interest payments to prevent the rolled-up interest (the interest charged throughout the term that is added to your final repayment figure) from eating into the proceeds when your home is sold. The interest rates are typically higher than other types of mortgage too.
Lifetime mortgages allow you to choose how you take the loan, either as one lump sum, or a smaller initial amount with a pot to ‘draw down’ (taken in stages). It’s important to make sure that the loan doesn’t affect any state benefits that you’re currently entitled to, which is possible if it pushes your savings above the acceptable threshold.
You can remain in your home without making any payments (if you choose not to) for the rest of your life.
Home reversion
Home reversion works very differently to a lifetime mortgage, as this involves selling a portion or all of your home to the lender, at a reduction on the market value.
This means that you won’t get as much for your home as selling it on the open market. In fact, you can typically get a maximum of 60% of what it’s actually worth.
The trade-off here is that there's no interest to pay, as you’re not really borrowing money, but getting early access to the proceeds of selling your home. You are, however, entitled to stay in your home for the rest of your life rent-free.
The lender will sell the house once you have passed on or gone into care, in order to get their money back.
To qualify for home reversion you will need to be over 60 and own your own UK-based home with a minimum value of £70,000.
How to improve your chances of getting a mortgage over 60
As with any mortgage, the lender wants to be confident that you can afford the repayments and that you have a strong credit history. You therefore have a better chance of qualifying for a mortgage if you:
Have a reliable income, whether that's from a pension, investments or work
Have a significant amount of equity in your home
Can provide a substantial deposit or offer up other assets to secure your borrowing against
The products that are specifically designed for older borrowers are likely to be easier to qualify for, as the affordability requirements are low for RIO mortgages and essentially you won’t need any income for equity release. You should compare all of your options with a qualified broker, however, to see which deal is the most suited to your circumstances.
Older People’s Shared Ownership (OPSO)
If you don’t qualify for any of the above, OPSO offers another option for over 55s looking to buy a new home. It works exactly the same as the main shared ownership scheme, but you will only be able to buy a maximum share of 75% of your home.
Once you own 75% you won’t have to pay any rent on the remaining 25% share to the housing association, however.
Lenders that offer over 60s mortgages
The majority of lenders with more flexible age requirements are building societies and specialist lenders, rather than banks. However, there are some high street lenders who have a maximum mortgage repayment age of 85.
Equity release lenders
With equity release you will need to meet minimum age limits, rather than maximum, you will need to be 55 to get a lifetime mortgage and 60 to get a home reversion plan. Always ensure that whichever equity release provider you opt for, they are a member of the Equity Release Council.
The Equity Release Council has their own directory of qualified equity release advisers and reputable equity release providers that you can choose from.
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