Mortgages for Pensioners and Older Borrowers

We cover all the important details you need to understand about mortgages if you’re a pensioner or an older borrower.

This is our main guide. For all our content on this topic, which may include an article about your specific circumstances, visit our dedicated mortgages for pensioners page.

Can you get a mortgage as a pensioner or as an older borrower?

Yes, you can. There are plenty of reasons someone may need property finance at this stage in their life, such as needing to remortgage at the end of an interest-only mortgage term or relocating to a property that suits you more as a senior citizen (smaller garden, fewer stairs, cheaper to look after).

However, it’s important to remember that older borrowers may face different obstacles and challenges. The choice of lenders open to offering a mortgage will undoubtedly be more limited if you’re retired or soon to be retired.

However, with the proper guidance, it’s possible to secure finance to buy a home or refinance an existing property. This could involve discussions with specialist mortgage lenders, exploring different types of lending products, or dealing with lenders who can provide more flexibility.

What are the age restrictions?

It is possible to get a mortgage, whatever your age, but some lenders will have upper age limits (not all). Even though the retirement age in the UK can be 55, many lenders will consider pensioners over 65 a more critical threshold, and you’ll be classed as an older borrower.

After reaching 65, your mortgage options will likely shift, making it more crucial to get expert assistance. For pensioners over 70 or 75, accessing competitive mortgage options can become even more difficult. However, solutions will still be available if you know where to look.

The rest of your finances and personal circumstances will play a big role in finding the right solution. But, with the right advice – mortgages for older people and senior citizens of any age can be easier to arrange than they were in the past.

Will you have to accept a short-term mortgage?

Some lenders offer short-term mortgages to facilitate loans, but this is not the only solution. A shorter term will mean larger monthly repayments, which may not suit your needs.

How much can you borrow as an older borrower?

If you are retired, it may be the case that you have a fixed pension income, which is what most lenders will want to see. But even with a stable income, some lenders won’t offer you the higher-range income multiples, and most will use a 4-4.5x salary multiple.

It’s not uncommon for some lenders to go lower than this level and use stricter affordability checks, which could mean only getting a small mortgage if you don’t speak to the right lender.

Along with your retirement income, here are some other areas that may be important for retirement lenders when considering how much to let you borrow as an older borrower:

• Age may not always impact the amount you can borrow, but it might reduce the term.
• The value of any other assets or property you own can sometimes reduce risk in the eyes of some lenders, meaning they can be more flexible with loan-to-value (LTV) ratio caps.
• Your pension income, benefits, and savings can all be taken into account with some lenders.
• Any existing debt or ongoing financial commitments (like dependents).
• How much do you spend on a regular monthly basis?
• The current state of your health.

How to get a mortgage if you’re retired

Your first step should be speaking to a mortgage broker specialising in later-life lending. Make an enquiry with us, and we will match you with an advisor with the right credentials.

The handpicked mortgage advisor we match you with will guide you through the following steps to full application:

• Collating the necessary paperwork
• Downloading your credit reports and optimising them
• Finding the right lender and filling the perfect mortgage application

Lenders offering mortgages for older borrowers

Your choice of lenders and borrowing options as a retiree or older person will depend on many factors.

But to give you an idea of some generic options that will be open to discussing potential mortgages for older borrowers and retirees, here are some examples:

• Aldermore – is open to applicants with an occupational pension, but your State Pension cannot be the only source of income.
• Santander will consider a private pension as primary income but only if the payments are made monthly (or more frequently).
• Earl Shilton Building Society—Income can come from a private pension, but if more than 50% of income comes from your pension, the maximum LTV will be 70%.

What interest rate to expect

Look at our rates below to understand the deals for lifetime and RIO mortgages.

The rates quoted above were correct at the time of writing and are subject to change at any time at the lender’s discretion. Speaking to a mortgage broker is the best way to keep track of the rates available at any given time.

Rates are always subject to change at the lender’s discretion.

The factors affecting what rate you’ll get will consist of:

• Amount of equity
• Loan to value (LTV)
• Age
• Property type
• Affordability (RIO Mortgages)
• Lenders’ minimum and maximum loan amounts

Eligibility criteria

Here’s an overview of some of the important areas that lenders will look at when deciding whether or not they’re willing to offer a mortgage for pensioners and retired borrowers:

• Age can be extremely important for lenders considering your application. For example, if you’re over 65, you’re more likely to be reliant on your pension as income. But not everyone of a similar age can be lumped into the same bracket. Some lenders understand this, allowing them to be more flexible with age limits.
• Employment: once you reach retirement age, you might want to continue working and earning an income (perhaps less likely if you’re over 70 or 75). If you do this, lenders will want to make sure it’s not just in the short term that you can afford payments and that you have a plan for the years ahead when relying solely on your pension funds
• Type of income: the kind of pension and income you receive as a retiree can make a difference. Various lenders will have preferences over dealing with applicants with an annuity, a defined benefit pension, or a drawdown arrangement (which can be more flexible to adjust for different economic conditions). Some will also include your State Pension and benefits, so you want to speak with a lender that suits your pension.
• Frequency of payment: how often you receive your pension payments can make a difference with some lenders. In most cases, the more frequent the payments, the better. But sometimes, this can be out of your control, so dealing with a lender who can work with your pension income schedule is vital.
• Your deposit: Like most mortgages, the size of your deposit can play an important role. Some lenders will have maximum LTV caps for older borrowers using pension income. A larger deposit can also lead to more competitive rates and terms. But, no matter the size of your deposit, an experienced broker can still find you a great deal.
• Term length: depending on your age and financial security, you may have to opt for a shorter term length for some lenders to feel comfortable arranging a mortgage.
• Property type can make a difference for lenders, even more so if the type of property is a ‘non-standard construction’ or has distinctive features. Similarly, if you’re looking to downsize to an apartment or flat, remember that leasehold mortgages can also come with their specific challenges.
• Number of applicants: mortgages for retired couples can be possible and, in some instances, could lead to a stronger application. However, it will depend on your finances because sometimes an extra applicant doesn’t always lead to a better deal or more favourable mortgage terms.

Types of mortgages available

Getting a mortgage as a pensioner can be challenging, but there are other ways to access funds and unique mortgage products that are worth exploring with your broker.

Here are some of the mortgages available, depending on your circumstances: 

• Retirement interest-only mortgages: this type of mortgage is designed specifically for retirees and senior citizens. It works similarly to a standard interest-only mortgage, except that it is designed for those in retirement or receiving a pension.
• Remortgage: your broker can help arrange a remortgage for you. A major benefit of using a broker instead of going alone is that they can explore all the options outside your current lender. This can make remortgaging more possible, especially if you’ve previously had an application declined.
• Friends and family: It is possible to arrange a joint mortgage with family and friends that combines applicants to improve your chances of success. This could mean having a retired pensioner and a younger applicant on the mortgage.
• Lifetime mortgage (Equity release): this is becoming an increasingly popular option for retired pensioners. If the bulk of your net worth is tied up in your home, equity release with a lifetime mortgage can be an excellent way to reach your financial goals. This may allow you to pay off a current interest-only mortgage or help you live a more comfortable retirement with extra funds.
• Home reversion is another form of equity release. Unlike a lifetime mortgage, with home reversion, you sell part (or all) of your house to a home reversion provider in return for a lump sum or regular payments. Usually, you need to be over 60 or 65, and you can continue living in the property until you die.

Alternatives and Government Schemes

• Downsizing: If you’re a retired pensioner, downsizing might make sense later in life. Doing this could mean getting a small mortgage, which may be easier to qualify than if you tried to remortgage or move to a bigger property. Downsizing could also allow you to access some of the equity you’ve built with home ownership.
• Older People’s Shared Ownership (OPSO): this government scheme functions like the standard Shared Ownership scheme. With OPSO, pensioners can still buy a home by purchasing a portion (or a share) between 10% and 75%. If you buy less than 75% of the house, you’ll pay rent on the remainder. Once you own 75%, you don’t have to pay rent on the remaining share.
• Home Ownership for People with Long-Term Disabilities (HOLD): This programme works a lot like OPSO as a shared ownership programme, but it can be an alternative if no OPSO properties are available that meet your needs.

Speak to a specialist mortgage broker for pensioners

To help you with this process, we offer a broker-matching service. All you need to do is answer a few questions. We’ll pair you with a skilled advisor with plenty of experience securing mortgages and finance for older borrowers (including pensioners and retirees).

Just call 0330 818 7026 or make an enquiry. We’ll arrange a no-obligation chat between you and your ideal mortgage broker today.