If you are already a homeowner, then an Equity Release Lifetime Mortgage can give you access to the wealth tied up in your house tax free without having to make any payments. A 55+ mortgage works in a similar way, but you just pay the interest. Here, we answer the most-asked questions about mortgages for over-55s…
Can You Get a Mortgage Over 55?
Indeed you can. It used to be the case that lenders would only consider granting a mortgage where the loan was designed to finish at retirement age. But now, as house prices have risen, mortgage durations have lengthened and people are coming onto the property ladder later in life, there are many mortgage products designed for an older age-group. Some products even set the upper age limit at 95!
How Does an Over-55 Mortgage Work?
This type of mortgage is basically a halfway-house between a standard mortgage or remortgage, and a lifetime mortgage equity release product. It is an interest-only mortgage where you pay the interest on the loan each month and retain ownership of your property. At the end of the mortgage period, the loan must be repaid, usually from the proceeds of the sale of the house. Usually, the minimum loan is £20,000, and at the most you can borrow 60% of your property’s value.
What is a Reverse Mortgage for Over 55s?
This is really another name for an Equity Release mortgage, where you release some of the money tied into your home to fund ways to improve your life as you get older. The term is more commonly used in Canada and the USA.
Is there a Buy-To-Let Mortgage for Over 55s?
In 2015, the law changed regarding protection for pension funds, and customers aged 55 or over became able to access their pension cash to use it in other ways. Many wanted to invest in a property portfolio, and new mortgage products for Buy-To-Let properties for people in this age group were created. But be careful – many Buy-To-Let mortgages are not regulated. Be sure to get independent financial advice before cashing in your pension pot and using it to invest in property. Obviously, becoming a landlord entails other responsibilities and costs outside of a deposit, insurance, fees and interest.
What Should I Consider Before Taking Out a 55+ Mortgage?
There are a few things:
Your credit score. Most of the time, mature borrowers have a decent track-record of credit, so this is not as problem. But it’s worth checking just in case.
Your income source. Salary, bonuses and pension will all be looked at by a lender to ensure that you are able to keep up with the payments each month.
How the loan will be repaid. Although this may be a long enough time away for you not to want to think about now, you really should consider what will happen when the loan term comes to an end. Will the repayment fall to you, your surviving partner, or your family? And will the market value of the house be enough to cover the loan, if worst comes to worst?
Would You Like to Discuss Your Options for an Over-55 Mortgage?
Please contact your local Mortgage Centres office and talk to one of our friendly, experienced advisers today. They will be able to help you work out the best plan to suit your needs.