Having a mortgage in retirement
Some people reach retirement with a mortgage still running. The options when the term ends, how lenders look at borrowing in later life, and the decisions it is connected to.
Some people reach retirement with a mortgage still running. The options when the term ends, how lenders look at borrowing in later life, and the decisions it is connected to.
Longer mortgage terms, later first purchases and interest-only borrowing taken out years ago mean some people reach their sixties and seventies still owing money on their home.
It is easier to plan for years ahead than to deal with when the term ends.
from savings or a pension lump sum.
onto a new term, where a lender will assess affordability on retirement income.
, paying the interest with the loan repaid on death or a move into care.
, where interest usually rolls up and is repaid from the property later.
, clearing the mortgage from the difference in property value.
Lenders assess whether the payments are affordable for as long as the mortgage runs, including after you stop working. That means your retirement income matters as much as your current earnings.
Leaving the conversation until the final year of a term narrows the options.
Ideally at least five years before the mortgage ends.
Many lenders lend into retirement where affordability can be shown.
Sometimes, but it depends on what that would do to your retirement income.
Talk to your mortgage broker well before your term ends about the lending options. Because the answer depends on pension income and the estate, ask them to introduce a financial planner so the two are planned together.
This article explains how things work. It does not take your circumstances into account. Your mortgage broker can introduce you to a regulated financial planner at Equity & General where the question needs one.
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