Common reasons for remortgaging when you’re over 60 or retired are to release equity from your home or to reduce your monthly mortgage payments by securing a better rate. As an older homeowner, you may have built up a considerable amount of equity in your property – either through an increase in property value or by paying off most of your mortgage. Remortgaging can allow you to take advantage of this equity by releasing some of it as cash or by applying for a lower Loan to Value (LTV) fixed-rate mortgage. Many lenders offer remortgages to the over 60s and retired, however, in general, the older you are the fewer products will be available to you. In this guide, we’ll discuss remortgaging in your 60s and 70s, remortgaging once you’re retired, and how a Retirement-interest Only (RIO) Mortgage or a Lifetime Mortgage could be a better option.
Can I Remortgage if I’m in my 60s or 70s?
Each lender sets its own upper age limit for remortgaging, and how they calculate their upper age limit can also vary – with some basing it on the borrower’s current age and others basing it on how old the borrower will be when the mortgage ends. Typically, most lenders will want your new mortgage to end by the time you’re 85, so if you’re 65 – 75 years old you may only be offered a 10 – 20 year term. Some specialist lenders are happy to go beyond 85 and some don’t have an upper age limit at all.
Remortgaging in your 60s or 70s (or even 80s), is certainly possible as long as you can show the lender that you will be able to afford the repayments throughout the term of your new deal, even when you are retired. They’ll also want to look at your credit score, so now’s the time to pay your bills on time and check for any mistakes on your credit history that can be amended. How much equity you own will also come into play – the more equity you own the lower your Loan to Value, and the more lenders you should have to choose from.
Your lender will need to look at your financial situation throughout the term of the mortgage when assessing your application. Therefore, if you are not yet retired, your lender will likely want to know:
- what date you expect to retire
- how much is in your pension pot
- what your overall retirement income will be
If you’re unable to remortgage due to low affordability or you would rather not carry on paying monthly mortgage repayments, you may want to look into a Lifetime Mortgage instead – we’ll discuss this option a bit later.
Can I Remortgage if I’m Retired?
Some lenders may consider you to be higher risk if you’re retired, as your income is likely to be lower and potentially more unstable than it was during your working years. That said, there are many remortgage products available to retirees, and as long as you have sufficient affordability and good credit you should be able to remortgage in retirement. Some types of pension, such as a Defined Benefit pension, are very reliable and tend to satisfy lenders’ affordability checks with relative ease. When assessing your affordability, be sure to tell your lender about all your income streams and savings – including investments, state pensions and benefits.
If your low retirement income means you’re unable to remortgage, or if your main goal is to reduce your monthly mortgage repayments, you may be better suited for a Retirement Interest-only (RIO) Mortgage or a Lifetime Mortgage – let’s have a look at these two options next.
Should I Get a Retirement Interest-only (RIO) Mortgage Instead?
A Retirement Interest-only Mortgage works in a similar way to a regular interest-only mortgage, in that you only have to pay back the interest to the lender each month but not the loan itself. The difference is that with a RIO Mortgage you don’t have to prove how you’ll repay the loan and there is no set deadline to do so. Instead, the loan will only be repaid to the lender when you die, move into permanent care, or sell your house. This makes the affordability assessments more lenient, as you’ll only have to show that you can keep up with the interest payments. You have to be over 55 to be eligible for a RIO Mortgage and they’re specifically designed to help older homeowners who are either unable or unwilling to take on a regular mortgage. You may want to remortgage your current deal to a RIO Mortgage so you can continue enjoying your home whilst benefitting from more of your monthly income. You can also use a RIO Mortgage to release equity from your home to supplement your retirement income.
Learn more about RIO mortgages here.
Should I Get a Lifetime Mortgage Instead?
Lifetime Mortgages are a type of Equity Release, but they can be used instead of remortgaging. With a Lifetime Mortgage, you can release up to 60% of the equity in your home as tax-free* cash or you can release just enough to pay off your remaining mortgage. The interest can roll up into the loan, which only has to be repaid when you die or move into permanent care and your house is sold. This means you can pay off your current mortgage and then continue to own and live in your home without worrying about monthly repayments. It also means that there are no affordability or credit checks. As long as you are over 55, you own a home in the UK worth at least £70k, and you have sufficient equity, you should qualify for a Lifetime Mortgage. As the interest rolls up into the loan the amount you owe will compound over time. However, all the products we recommend come with a ‘no-negative equity guarantee’, meaning your estate will never owe more than the value of your home, no matter how long you live for.
Learn more about Lifetime Mortgages here.
The Bottom Line
It is possible to remortgage at almost any age, even if you’re retired, as long as you can prove you can afford the repayments throughout the term of the mortgage. Although there are specialist lenders that don’t have an age limit, most will want your mortgage to end before you’re 85. Therefore, depending on your age, you may have to accept a shorter term than a standard 25-year mortgage, which can mean your monthly repayments will be higher. If you do not qualify for a regular mortgage, or you’d rather not take on the financial commitment, you may wish to consider a RIO Mortgage or a Lifetime Mortgage instead. With a RIO Mortgage, you’ll only have to pay the interest each month, and with a Lifetime Mortgage, you don’t have to pay any monthly repayments at all. Both products allow you to own and live in your home until you die or move into permanent care, at which point your house will be sold to repay the lender.
We’ve been helping our local community with remortgages, RIO Mortgages, and Lifetime Mortgages for over 30 years! We search thousands of products to find the right deal for your situation. We’ll also guide you through the process and liaise with your lender and solicitor to ensure the process goes smoothly for you.
Book your FREE no-obligation consultation with one of our friendly advisors to get going quickly. We have offices in Frimley and Basingstoke, or we can help you remotely via phone or video call if you’d prefer. We look forward to chatting with you!
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*Potential tax implications may apply depending on what you do with the money, so we recommend you seek independent legal advice.
Equity release includes Lifetime Mortgages and Home Reversion Schemes. We can advise and arrange Lifetime Mortgages and will refer to an approved specialist for Home Reversion Schemes.
Lifetime mortgages are only applicable to over 55s, this may affect state or means-tested benefits and can affect the inheritance you may leave.
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