The closer you approach retirement, the harder it is to get a mortgage. However, with more individuals working till 60 and over, you may still get one. It might shock you as getting a mortgage with no fixed income seems unrealistic.
Growing age, health issues and financial uncertainties add to disbelief. It is the reason individual mortgage providers set an age limit. They do so by analysing the basic life span, health issues and other aspects.
You can consider a senior mortgage to acknowledge a new house, borrow against the owned property and free up some money for your retirement. You can even use it for repairing and selling your home for a good price. It may help you fund the vacation and save some money for health needs. The blog discusses the senior mortgage in detail. Let’s comprehend what it is and how you can use it for repayments.
It is a mortgage for individuals aged above 55 seeking to buy a new home or for other needs. Here, the loan provider shares the upper hand on the possessions in the event of default. He may rightly claim it if you fail to repay the dues.
Individuals having a decent pension, a strong credit score, and property in their name may qualify. Having home ownership helps you cover the payments on a new home with equity. You can sell a part of your owned home as equity to use it as a repayment. Apart from that, if your primary income, like a pension, does not suffice, you must provide an additional income source. It could be income from dividends and businesses you may have.
Moreover, the older you are, the shorter the repayment term. You may only get fewer deals, and mostly interest only mortgages. Under this, one usually pays off the debt by selling the house. It is ideal for someone seeking money to renovate and pay the dues by selling the property. Here, you don’t have to pay the compound interest.
Yes, you may get a mortgage quote on your pension income. You may have the privilege if you can afford the monthly loan payments without defaulting. The loan providers analyse your pension and other expenses you incur every month.
You may have to provide a valid pension slip as proof. It helps them identify the scope of heavy loan repayments, like a mortgage. You may qualify if you can repay the dues without compromising on basic expenses.
Sometimes, you may not get the pension timely. It may be due to an issue. However, this delay may affect your monthly instalments on your mortgage. Skipping it could lead to missed payment charges and penalties. It could make the loan costly.
Thus, do not wait until you get the pension. Instead, check loans for pensioners online. It helps you finance the due instalment by providing a back income/pension proof. It saves you money and eases the financial arrangement. You won’t miss anything here. It helps you remain disciplined with long-term payments. It is crucial to confirm a good credit rating.
What is an interest-only retirement mortgage? How does it work?
The retirement interest-only mortgage is for individuals over 55 years of age. It is a secured loan against your very own property. You pay interest every month. It means the amount you owe does not increase with time. What’s more, you don’t have to pay the loan until you or the last borrower leaves the world.
Always calculate the amount and borrow right. You can use an interest-only retirement mortgage calculator to determine the approximate costs. Here is how it works:
For example, you have a current mortgage balance of £100000 with 6 years of mortgage remaining. If the interest charge for next month is 3.40%, here is how your payments may look:
| Monthly payment amount | £1,537 |
| Interest-only payments | £283 |
| The amount you pay after 6 months of interest-only payments | £1,663 |
Note: You can get your total monthly payment by adding details of any sub-accounts. Add these to get the total payments.
You can use the senior mortgage to meet different life purposes. You may struggle to get much flexibility on other loan types than this one. It is because senior mortgages are especially designed for those 55 and above to meet their life goals. Here is how you can use the equity in the property for repayments:
You can use a loan to repay the existing mortgage payments. You get the amount according to your affordability and the equity in the property. It is ideal for individuals with a low pension but who need to pay on the mortgage. The loan provider calculates the value of the property and lends money accordingly.
You can consider an interest-only or lifetime mortgage secured against the property. Thus, you can use the equity to pay off the existing mortgage. You just need to pay interest on an interest-only mortgage cover.
If an urgency occurs and you cannot pay the interest payments, wait. Do not skip this important payment. Instead, you can borrow money in the UK to bridge the requirements. You may get instant short-term loans to counter emergencies. You can get the amount according to what you can afford to repay.
You may want to buy a new property for your children or grandchildren. You may also consider the option if your present house has structural problems. Here, you must meet the basic age eligibility measures to get the mortgage. The retirement income and assets should be sufficient to repay the loan. You may consider a Standard mortgage, an interest-only mortgage, and Equity Release schemes.
If you don’t have a retirement fund but need money for a comfortable one, senior mortgages may help. You can use the equity in the property to fund the needs. For example, you may plan a trip by mortgaging the property and getting the cash.
You can use the senior mortgage to refinance the existing mortgage cover. It is ideal if you have good years of mortgage left. Moreover, the new mortgage cover should be cheaper than what you pay currently. Otherwise, remortgaging would not work. It is ideal for individuals with an ongoing mortgage.
Senior mortgages are ideal for individuals aged 55 and above. One may use it to pay for the mortgage, remortgage, buy a new home, etc. Individuals with regular pension or other forms of repayment may qualify. However, it is a secured loan against the property you own. You can also try an interest-only mortgage if you don’t want to amount to change. It requires you to pay only interest payments monthly.
Jennifer Powell embraced finance writing just the moment she started working as a finance executive with EasyCheapLoan, which is a direct lender in the industry. Jennifer has an exceptionally keen eye for details and used her skills to pen down numerous blogs and articles on finance. When asked, she simply replies with a look on her face that shows how genuinely she cares for people struggling with financial problems. Jennifer works dedicatedly as a finance professional and considers sharing both her experiences and knowledge to increase the financial literacy of people and businesses.
