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Remortgaging into retirement

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By Pete Mugleston   Mortgage Advisor

Last updated: 13th January 2019 *

From releasing equity to securing more favourable rates, there are many reasons why you might remortgage, and we often hear from customers who want to do this in later life.

If you’re one of the many looking to remortgage in retirement or as it’s approaching, you’ve come to the right place as this article will tell you everything you need to know about later-life borrowing, the rates on offer and the maximum age you can remortgage at.

The following topics are covered below…

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What is the maximum age I can remortgage at?

Remortgaging in retirement or later life can be more complex than refinancing in your prime as you may no longer have a regular salary or your income might be considerably lower. For these reasons and more, certain lenders might view you as a higher risk customer.

Don’t be discouraged, though, as there are lenders who specialise in later-life borrowers. Some will loan to remortgage customers aged between 65 and 75, others will go as high as 85, and a smaller number will offer remortgages to customers who are even older.

At some providers, the age restrictions apply to the time when the remortgage loan was taken out, but at others it’s when the term ends. Generally speaking, when lending into retirement providers want borrowers to be aged between 70 and 85 when the term ends, but some go higher.

If you’ve been turned down for a remortgage because of your age, or fear that you might be, get in touch and the expert whole-of-market advisors we work with will connect you with a lender who specialises in customers who wish to borrow in later life.

Remortgaging for over 60s

Remortgage options are often plentiful for borrowers in their 50s, as property owners in this age bracket will be eligible for standard 25-year terms, providing they meet the lender’s affordability requirements. A significant number find that they do, as many see their peak income and have built up a healthy amount of equity by the time they reach these years.

Things might get more complex if you want to remortgage at 60 or older as some lenders may only be willing to offer you shorter terms of 10-15 years, although some might go longer, providing you tick the other boxes on their eligibility checklist (more on this later).

If you are planning to retire at the traditional age of between 65 and 70 or have taken early retirement, most remortgage lenders will want to see that your pension, investment or other post-retirement income is adequate to cover the new mortgage payments.

If you have not yet retired, most lenders will want to know the following…

  • Your expected retirement date
  • The current value of your pension pot
  • How much income you will have post-retirement

Can I remortgage at 65 or over?

The short answer is yes!

Your remortgage options will shrink after the age of 65 and most lenders will require your mortgage to be paid off by the time you reach a certain age. But, affordability permitting, there are options out there for you!

There are specialist lenders who set their age limits higher than 65 and a minority who have no upper age limit at all. Your chances of securing one of their products on favourable rates may again depend on whether your income (whether that’s from a pension or another source) will cover the repayments, or how much equity you have in your home.

Remortgages for over 70s

As is the case for borrowers over 65, your mortgage options will be fewer by the time you reach your 70th birthday. Remortgaging at this period in life is more difficult, but by no means impossible, as there are lenders whose upper age limit is 75. At other providers it’s 85, and a minority apply no upper age limit to remortgage products.

Due to the increased risk to the lender, remortgages for borrowers over 70s years old tend to come with restricted terms and additional conditions. Anything with a term extending beyond 10 years may be hard to come be for anyone in this age bracket.

If you’re seeking a remortgage at over 60, over 65 or even over 70, it’s important to have access to the whole of the market to find the lenders offering the best deals for later-life borrowers. Get in touch and the advisors we work with will point you in the direction of the remortgage providers offering the best rates for someone in your age bracket.

The best remortgage deals for later-life borrowers

There are many lenders who offer specialist products to remortgage in retirement that may be more suitable for your needs that refinancing with your current lender. Speak with one of our expert advisors to find out if there are better options out there for you!

Interest only remortgages for older borrowers

With an interest only mortgage, the borrower only pays the interest on the mortgage loan each month. You don’t pay off the capital until the end of the term, which can be when the borrower passes away or enters long-term care, so this may suit older people.

The main benefit of an interest only remortgage is that the monthly payments are obviously lower, leaving you with more disposable income, but these deals are not without risk. For starters, as you will need a means to settle the full debt if you plan to remain in your home beyond the end of the mortgage term. Most lenders will only approve you for an interest only mortgage if you can prove that you have a viable repayment vehicle in place.

The table below provides a sample of repayment vehicles and how likely lenders are to accept them…

Repayment Vehicle Accepted By
Existing Endowments Most Lenders
Stocks & Shares ISA's & Portfolio's Most Lenders
Other Investments Most Lenders
Savings Some lenders
Sale of this/Other property Some lenders
Pension Pot Some lenders

Can I switch to interest only when remortgaging if I’m a later-life borrower?

This will certainly be possible at some lenders, although a specialist remortgage provider may be necessary if you’re over 70 and aiming to switch to interest only.

The select lenders who offer these deals to older borrowers will base their lending decision on the viability of your repayment vehicle (see the table above), as well as other factors such as your credit rating, property type and how much equity you have.

If you’re looking for an interest only remortgage deal for over 70s or over 60s, get in touch and the whole-of-market advisors we work with will help you find the right lender.

Guarantor mortgages for later-life borrowers

Another way you could potentially boost the number of remortgage options available to you in later life is by taking out a guarantor mortgage. These deals involve a family member signing up to act as a guarantor for your home loan, which basically means they will be liable to make any payments you miss, and must do one of the following…

  • Put up their home as security
  • Secure the loan against savings

If you’ve been turned down for a remortgage due to your age, having another family member act as a guarantor could be a game-changer as it will make you a lower risk borrower in the eyes of some lenders. Get in touch to find out more.

Alternatives to remortgaging in later life

If you’re hoping to release equity from your property in your later years but have been turned down for a remortgage, there may be other options out there.

Equity release for later-life borrowers

Not to be confused with releasing equity, equity release is a product aimed at over-55s. The most popular type is a lifetime mortgage, which is basically a loan secured against your home with no monthly repayments. The interest is added to the loan amount and it is payable in its entirety at the end of the term. Like with an interest only mortgage, the final total is often settled when the property owner dies or enters long-term care.

This could be a useful option for anyone in need of a lump sum, for whatever reason, in their senior years. It may be possible for borrowers to remain in their home and make no repayments during their lifetime, and the capital itself will be tax free.

That said, there are disadvantages to choosing an equity release scheme over a remortgage. For instance, there’s a chance it could negatively affect the amount your family will inherit upon your death and could also impact on any means-tested benefits you claim.

Downsizing in later life

If your plan is to remortgage to ensure you’re on more favourable rates and reduce your outgoings that way, it’s also worth considering whether there are more savings to be made from downsizing, i.e. moving to a smaller property with a more affordable mortgage.

This may be an option for older borrowers in specific circumstances, such as widows and widowers who no longer need as much space as they used to. You may find that a new mortgage on a smaller abode comes with lower monthly payments than the cheapest remortgage on your current property.

It is, however, important to tally up all of the costs involved before making this decision. When moving home, you may have the following fees to foot…

  • Estate agent fees
  • Removal costs
  • Valuation fees
  • Stamp duty
  • Legal fees
  • Mortgage fees

Of course, some of these fees may be waived at the lender’s discretion, but the point is that you need to work out the overall cost of moving and offset it against the overall cost of remortgaging your current property.

If you’re unsure whether a remortgage or one of the alternative options we’ve outlined above is the right choice for you, get in touch. The whole-of-market advisors we work with will assess your circumstances, offer expert insight and connect you with a lender offering the best deals.

What else impacts eligibility for a later-life remortgage?

We’ve discussed how your age can affect a remortgage application and also highlighted how the amount of equity you hold is important when it comes to securing a favourable remortgage agreement, but these aren’t the only factors lenders will take into account.

Remortgage providers will also look at the following when calculating your eligibility…

  • Your credit score:
    The cleaner, the better, but it may be possible to land a remortgage with bad credit at some lenders, depending on how long the adverse credit has been on your file, if it’s been satisfied and what it actually is. Missed phone bill payments are generally viewed as less severe than a recent bankruptcy or repossession, for instance.
  • Your income:
    As we’ve already mentioned, older borrowers must prove that their income is adequate to cover the mortgage payments. If you’re planning to use your pension or other non-standard forms of income to pay the mortgage, a specialist remortgage lender may be required.
  • The property type:
    If you live in a standard house type, taking out a remortgage is generally more straightforward than those with a non-standard home, such as one that wasn’t built from bricks and mortar or a house with a thatched roof.
  • Your other outgoings:
    Generally speaking, borrowers with other significant outgoings such as personal loans will be considered higher risk by some lenders.

Speak to a later-life remortgage expert

If you like anything in this article or you’d like to know about remortgaging in later life, call Online Mortgage Advisor today on 0800 304 7880 or make an enquiry here.

Then sit back and let us do all the hard work in finding the lender with the right expertise for your deposit size and personal circumstances. We don’t charge a fee and there’s absolutely no obligation or marks on your credit rating.

Updated: 13th January 2019
OnlineMortgageAdvisor 2019 ©

FCA disclaimer

*Based on our research, the content contained in this article is accurate as of most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The info on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs. Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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