Mortgages for Pensioners: A Comprehensive Guide for Older Borrowers

Mortgages for Pensioners and Older Borrowers:
What You Need to Know

Navigating the mortgage market as a pensioner or older borrower can seem complex, but understanding the options available is key. Whether you're looking to remortgage, downsize, or buy a new property, there are solutions tailored to your circumstances. This guide covers the essential details and considerations for older borrowers seeking a mortgage.

Can You Get a Mortgage as a Pensioner or Older Borrower?

Yes, it is possible to get a mortgage as a pensioner or older borrower. There are many reasons you may seek financing at this stage in life, including paying off an existing interest-only mortgage or relocating to a more suitable home. However, it’s important to be aware that as you age, the pool of lenders willing to offer you a mortgage may decrease. Challenges can arise due to stricter lending criteria, but with expert guidance, it's possible to secure a mortgage that suits your needs.

Mortgage One works with specialist lenders who offer flexible solutions, and a broker can help match you with the right lender.

What Are the Age Restrictions?

Mortgage One specialises in mortgages for older clients. While it’s possible to get a mortgage at any age, many lenders impose upper age limits. Lenders generally view pensioners over 65 as a more critical threshold, often limiting borrowing options. For those over 70 or 75, options can become more limited, though certain lenders and products still cater to these older borrowers.

Your personal finances and income sources will influence the mortgage solutions available. Lenders may consider your pension income, benefits, savings, and other assets when assessing your application. Working with a specialist broker can ensure you're aware of the full range of available options.

How Much Can You Borrow as an Older Borrower?

Your ability to borrow as a pensioner will largely depend on your income, typically derived from pensions, savings, or other investments. Most lenders will apply a salary multiple of around 4 to 4.5 times your pension income. However, some lenders may impose stricter affordability checks or lower multiples.

Several factors can impact how much you can borrow, including:

• Your age, which may affect the length of the mortgage term

• The value of any additional assets or property you own

• Your monthly expenses, existing debts, and health

• Lenders may also consider the size of your deposit, with larger deposits potentially securing better terms.

How to Get a Mortgage If You’re Retired

The first step is to speak with a mortgage broker who specializes in later-life lending. Mortgage One offers a broker-matching service, ensuring you are paired with an experienced advisor. Your broker will guide you through the process, from gathering documentation and optimizing your credit report to submitting the perfect mortgage application.

Available Lenders for Older Borrowers

Several lenders offer mortgage products specifically for older borrowers. Examples include:

• Aldermore: Accepts occupational pensions, but not State Pension as the sole income source.

• Santander: Considers private pensions, but payments must be regular.

• Earl Shilton Building Society: Allows pension income but limits borrowing to 70% LTV if more than half of the income is from a pension.

A broker can help identify which lender best fits your situation and guide you through the application process.

Eligibility Criteria for Pensioner Mortgages

Lenders consider various factors when assessing a mortgage application for older borrowers. Key criteria include:

• Age: Some lenders impose stricter terms after 65 or 70.

• Employment: If you’re still working in retirement, lenders will want to know your long-term income plans.

• Income type: Defined benefit pensions, annuities, or drawdown pensions may be preferred.

• Deposit size: Larger deposits can lead to more competitive mortgage terms.

• Property type: The type of property you’re buying or refinancing can influence lender decisions.

Types of Mortgages Available for Older Borrowers

Several mortgage types are available to older borrowers, depending on individual circumstances:

• Retirement Interest-Only Mortgages (RIO): Specifically designed for retirees, these work like standard interest-only mortgages but cater to those with pension income.

• Lifetime Mortgages (Equity Release): Popular among pensioners, these allow you to release equity tied up in your property without having to make regular repayments.

• Remortgage Options: If you’re looking to switch lenders or refinance, a broker can help explore options beyond your current provider.

• Joint Mortgages with Friends or Family: This option can improve your chances of mortgage approval by combining incomes.

• Home Reversion: A type of equity release where part of your home is sold to an investment company in return for regular payments or a lump sum.

Alternatives and Government Schemes for Older Borrowers

If traditional mortgages aren’t an option, there are alternatives worth considering:

• Downsizing: Selling a larger home and buying a smaller, more manageable property.

• Older People’s Shared Ownership (OPSO): A government scheme allowing pensioners to buy a portion of a property (10-75%) while paying rent on the remaining share.

• Home Ownership for People with Long-Term Disabilities (HOLD): A shared ownership scheme for those with long-term disabilities.

Speak to a Specialist Mortgage Broker

Navigating the mortgage market as a pensioner or older borrower can be challenging, but help is available.
Mortgage One specialises in later-life lending. Get in touch today to arrange a free, no-obligation chat with a broker and explore your mortgage options.