In recent times, many are finding themselves in a financial squeeze. Mortgage rates have skyrocketed, and with inflation notably straying from the 2% target, everyday essentials have become prohibitively expensive for many. The aftermath? A discernible dip in disposable incomes. While banks have introduced measures to support mortgage borrowers, older individuals face a unique set of challenges.
For many nearing or in retirement, mortgage concerns have intensified. Several are approaching the end of their competitively priced fixed-term mortgages, only to discover the prospect of a considerably costlier remortgage. With impending retirement on the horizon, a few lenders are turning them away, denying them the choice of extending their mortgage term – an option often available to their younger counterparts who have extended working years ahead.
So, what choices are there for those considering later life lending?
- Retirement Interest-Only (RIO) Mortgages:
Lenders have developed products like RIOs, allowing borrowers to pay just the interest every month, substantially reducing monthly expenditures. The principal sum is settled when the home is sold, the owner moves into long-term care, or upon their death. A key feature of RIO mortgages is that they don’t have a set termination date.
- Equity Release or Lifetime Mortgages:
This option allows homeowners to take a portion of their property’s equity without the need to sell up and move. Monthly repayments aren’t required; instead, the loan plus any added interest is repaid upon the property’s sale, typically when relocating into care or upon the homeowner’s death. One drawback is that this option could reduce the assets left for inheritance.
- Seek advice from a Specialist Broker:
A mortgage broker specialising in later-life lending can provide excellent insights and advice. They have relationships with a wide range of lenders and access to specialist products, some exclusive and not available directly to consumers. Their expertise is vital when it comes to ensuring the best lending solution for older borrowers. Not only that, they will manage much of the process on your behalf.
If circumstances permit, selling the existing home to buy a more affordable one might be a smart strategy. This move could significantly cut down or completely clear the mortgage.
- Seek Lenders with Flexible Age Parameters:
Although some lenders might impose age boundaries, there are others who will be flexible on lending to older borrowers. An independent mortgage broker will be able to access these lenders to secure a lending solution. We have clients in their 80s who we’ve been able to secure mortgages for, dependent on evidence of a steady retirement income.
- Extend the Mortgage Term:
Even if your present lender is unwilling to consider extending your mortgage term, we can find an alternative. There are plenty of lenders who will agree an extension, especially on an interest-only basis, which should bring down monthly payments.
Before making any decisions about your mortgage, speaking with a qualified mortgage specialist is vital. They can present individualised advice, ensuring your decisions are both informed and suitable.