Residential property specialist Kayleigh Curtis answers an increasingly common question: can a pensioner get a mortgage?
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Although some lenders set an arbitrary age limit, legally, there is no maximum age for applying for a mortgage. The overriding considerations are the same as for any applicant:
- is it affordable and
- can you prove you can repay the loan?
Reasons for a retiree applying for a mortgage
The most common reasons for applying for a mortgage as a retiree are:
- funding home adaptations to meet your needs as an older person.
- moving to a home better suited to your needs as an older person.
- paying off the outstanding balance at the end of an interest-only mortgage.
- raising funds to help children or grandchildren with raising a house deposit.
- providing additional retirement income by using a lifetime mortgage to release equity from your home.
Mortgage age limit
Some lenders apply an age cap as low as 55. But as people are now living and working longer, others are more open-minded, and a few have upper limits as high as 85. Generally, smaller lenders offer greater flexibility, although their interest rates tend to be higher. For all these reasons, many older people applying for a mortgage use a mortgage broker.
Is it easy for a pensioner to get a mortgage?
Generally, it’s not easy for a pensioner to get a mortgage. Lenders need to be satisfied that you have a reliable income stream and that it’s affordable. Depending on whether or not you are still working, among the documents you may be asked for are:
- a statement showing the current value of your private pension pot.
- your workplace pension forecast.
- annuity statements.
- bank statements.
- wage slips.
As with any mortgage applicant, you will also need a good credit history.
See also: Types of mortgages explained
Mortgages for older people
Some types of mortgages are designed specifically for older people. These include:
- Lifetime mortgages are a form of equity release.
- Retirement interest-only mortgages are broadly similar to standard interest-only mortgages in that you only pay monthly interest. The outstanding balance is repaid when you sell your home, go into long-term residential care or pass away.
- Older People’s Shared Ownership (OPSO) is a government-backed scheme but not a traditional mortgage. Instead, it allows older people to get on the housing ladder. You buy a proportion (between 10% and 75%) of the property and pay rent on the balance.
- Home Ownership for People with Long-Term Disabilities (HOLD) is like OPSP in that it’s also a shared ownership scheme. HOLD allows you to apply for properties that meet your specific needs if none are available through OPSP.
Age UK provides some very helpful information on specialist housing options for older people.