It’s not uncommon to need a mortgage during retirement and there are mortgage options available for pensioners.
Although some lenders do have their own maximum age limit, there’s no universal age limit for applying for a mortgage.
In this guide we will explain the mortgage options available to someone of pension age, and how a mortgage broker can help secure the best deal.
What is a pensioner?
A ‘pensioner’ is normally described as someone who is over the state retirement age and has stopped working.
The UK State pension age is currently 66 but will rise to 67 between 2026-2028. With a further rise planned to age 68.
And many people of this age continue to work full-time, or take up part-time roles, to supplement their pension income.
In relation to mortgages, a ‘pensioner’ is usually someone aged 65 or over. They can be retired, or still working.
At this age the UK mortgage lenders will apply slightly different underwriting criteria, taking into consideration the reduction in income and future earnings potential.
While there are plenty of mortgage options available, how you qualify for them, and which one to choose, can be made easier by speaking with an independent mortgage broker.
Reasons for needing a mortgage
When you are retired, or over the age of 65, there are still many reasons why you might need to take out a new mortgage. Or perhaps remortgage to a new lender.
Home improvements
You are happy with your home and it’s location, but would like to make some improvements.
Buy a forever home
Move to a new home that is more suitable for a retired person. Perhaps a smaller home, or one without stairs.
Pay off interest only mortgage
If your interest only mortgage has ended then you may need to remortgage to pay off the balance.
Release equity
Equity release mortgages are available to homeowners over 55. You can release equity as a lump sum or to boost your income.
Is there an age limit for pensioners?
Once you start looking at borrowing in to retirement and mortgages for pensioners, you will see that age is a significant factor for many lenders.
There is no set rule for age limits around mortgages, each lender is free to establish their own criteria. As we are all living, and working, longer the lenders are gradually adapting their attitude to age.
The choices you have tend to change when you reach the age of 65, or you want a mortgage that finishes after you are 65.
Typically, lenders will have a maximum age when applying for a mortgage, and another for when the mortgage should end. This could mean that you can only have a shorter mortgage term, due to your age.
For pensioners over 70-75, finding competitive mortgage deals can become more difficult.
Younger borrowers opting for a marathon mortgage may well find that the mortgage term ends when they are of retirement age. While these mortgages are available, lenders will be asking how you can maintain the payments when in to your 60’s or 70’s.
How easy is it to get a mortgage?
The later life mortgage market is growing as lenders realise that pensioners still have a need to borrow after the age of 65. The last 5 years has seen some considerable improvements, and more lenders now welcome older borrowers, retired or not.
It is quite easy to get a mortgage now as a pensioner, when compared to a few years ago.
But as with all mortgages, your own personal circumstances will dictate what you can and can’t do, when measured against a lender’s criteria.
We will cover the specifics types further down the page, but pensioners have two broad options for mortgages:
Those that require monthly payments
And those that do not
To qualify for a mortgage where monthly payments are needed, you need to have sufficient income to demonstrate your affordability. And this needs to last throughout the mortgage term. Pension income is acceptable; state, employer and private are all fine.
Presuming that you have enough equity in your home, the lenders will be willing to grant a mortgage once your affordability has been investigated and confirmed.
There are some schemes that do not require any payments at all, the interest owed is simply added to the amount you borrowed. This is a good solution if you do not have enough monthly income to make the necessary repayments. On the flip side, it does mean the amount you will owe will get bigger each year.
And in addition..
You may face different challenges as an older borrower, that you have not come across before.
- The primary one is that there are fewer lenders offering these mortgages, although that is changing
- You may find that the loan to value LTV is capped
- And some lenders will restrict the length of mortgage term
What mortgages can a pensioner get?
As a pensioner, you may be wondering about the various mortgage options available to you.
The good news is that there are specific mortgage products designed to cater to your needs.
In this section, we will explore some of the most common mortgage options available to pensioners in the UK.
From equity release schemes to Retirement Interest Only (RIO) mortgages, we’ll provide you with an overview of these options, helping you understand the potential benefits.
Before choosing any of these options, you should first seek independent mortgage advice from a broker.
Standard Mortgage
It is possible to apply for a standard residential mortgage if you are 65 or over. This could be to move home, or to remortgage. A joint mortgage with parents could be a way to help children buy their first home.
You are likely to be restricted on the mortgage term duration and most of these loans will be set up on a repayment basis.
The standard mortgage affordability checks will apply, so you need sufficient disposable income to qualify.
Retirement Interest Only Mortgage
A Retirement Interest Only Mortgage, or RIO, is for borrowers aged 55 and above.
These are designed to assist older borrowers who have not been able to qualify for a standard mortgage. The RIO mortgage will be set up as interest-only, and you only have to prove that you can afford the monthly interest payments.
No maximum age or term
Interest only payments
Loan is repaid on death or long term care
Lifetime Mortgage
An Equity Release Lifetime Mortgage requires no monthly payments.
You can borrow up to a set percentage of your property value and use this for any purpose. Interest is charged but this is added to the amount you borrowed, so your income status and affordability is unimportant.
No maximum age or term
No monthly payments
Loan is repaid on death or long term care
Remain in your own home
How much can you borrow as a pensioner?
This will depend on the type of mortgage you choose, as some are based on your income, but all will have maximum loan to value limits.
With a standard mortgage you will need enough provable income to be able to afford the monthly repayments, for the whole of the mortgage term. This will undoubtably involve an assessment of your pension income.
With a RIO mortgage you only need to show that you can afford the monthly payments of interest. Some lenders allow you to borrow up to 75% LTV.
An equity release lifetime mortgage has no minimum income requirements, as there are no payments. The maximum amount you can borrow is based on your age, the older you are, the higher the limit. This can go as high as 50-60% LTV.
Home Reversion plans are not based on your income. The amount you can borrow is based on your age and the property value, with a maximum LTV of around 80%.
How to get a mortgage
If you are a pensioner looking at your mortgage options, it’s understandable to feel a little overwhelmed.
There are a lot of similar sounding mortgages, from lots of different providers.
And some of these you will not have heard of before.
Whether you think you need a standard residential mortgage, or one of the equity release plans, it’s important to get some advice beforehand. This is especially true if you want the best terms and rates.
All of these mortgage types will affect your property, and potentially reduce how much you leave behind when you die.
Let Respect Mortgages put you in touch with one of the UK’s leading independent mortgage brokers.
They have fully qualified and skilled advisers who can help with all of your later life borrowing requirements.
Call us on 0330 030 5050 or click the button below.
Borrowing into retirement
Applying for a mortgage in later life can be particularly challenging. In this guide we will outline the options and solutions available when you borrow into retirement.
Equity Release Guide
Over 55? Our complete guide to unlocking the cash from your home using an equity release plan.
Mortgage Broker Guide
In this guide we’ll take a look at what mortgage brokers do, how they can help you, how they get paid plus tips on how to find a good one.
