What is a Retirement mortgage?
Our Retirement mortgages are aimed to meet the unique needs of older borrowers that are either looking to release equity or move home. If necessary, the amount borrowed can be paid back from the sale of the property when the borrower dies or moves into alternative accommodation such as long term care. During the term of the mortgage the borrower is responsible for meeting the monthly payments which can be interest only or capital & interest repayment.
Who is a Retirement mortgage potentially suitable for?
If you are moving house or looking to release equity from your current home and will be over the age of 75 at the end of the term then this type of mortgage may be suitable for you.
You must have a source of income, typically from a pension, so that interest payments can be afforded for the term of the mortgage which may be up to your full lifetime. It is important that your income is index linked so that you can be sure it will keep up with the cost of living over the term.
How much can I borrow?
The Society can lend a minimum of £25,000 and a maximum of £250,000. The amount you can borrow will depend upon your needs and your ability to repay the interest each month. Following an assessment of your income and expenditure our adviser will be able to guide you as to how much the Society may be able to lend to you.
The Society can lend up to 50% of your property’s value, which will be confirmed by a professional property valuation.
Why do Retirement mortgages have a higher interest rate than traditional mortgages?
Many lenders choose not to offer mortgages to people in their later years as they consider the risks to be higher and the on-going management of an aging population in their mortgage book to be too great a workload.
Our retirement products are priced at a slightly higher level than our normal mortgage products in order to reflect the increased resource required to provide advice and the management of the mortgages through their lifetime. We apply a lower rate to the product where the applicant has a Lasting Power of Attorney as we believe these cases will be easier to manage over the life of the loan.
You should note that if you will be between the age of 76 and 85 at maturity of the loan then we may recommend a mortgage from our standard products if your repayment method is capital and interest, or interest only where repayment is from assets other than the home itself.
What is a Lasting Power of Attorney (LPA) and why is it important?
A Lasting Power of Attorney (LPA) is a legal tool that allows you to appoint someone to make certain decisions on your behalf. The appointed person can manage your finances for you in the future if you reach a point where you are no longer able to make decisions for yourself.
The Society especially recommends LPAs to older borrowers as this ensures the mortgage payments and other aspects of your finances can continue to be dealt with in the event of you losing your mental capacity during your lifetime. To find out more about LPAs click here.
The Society strongly recommends that anyone considering this product take independent legal and financial advice before entering into the mortgage contract.
For more information about our Retirement mortgage click here.
You may also find it beneficial to read the Building Society Association's 'Can I get a mortgage at my age?' guide.