How do over 50 mortgages work?
How do lifetime mortgages work?
Lifetime mortgages are available to people aged 55 and over and is a loan secured against your home that gives you access to tax-free funds that can be used in a variety of ways. You’ll still own your property but don’t need to worry about monthly repayments like you would with a retirement repayment mortgage.
With a lifetime mortgage, typically there are no monthly repayments to make, as the loan plus roll up interest is repaid when the plan comes to an end when you or the last remaining applicant passes away or moves into long term care.
Lifetime mortgages could provide you with a portion of your property’s value in a one off lump sum. Alternatively, drawdown lifetime mortgages allow you to release funds in smaller instalments as and when needed, following an initial lump sum, whilst only paying interest on the amount released.
How do retirement interest-only mortgages work?
RIO mortgages are available to people aged 50 or over and also lifelong mortgages secured against your home that allow you to tap into some of the money built up in your home. Where they differ is that you repay the interest on the loan each month, then repay the original loan amount itself at the end of your plan.
How do retirement repayment mortgages work?
A retirement repayment mortgage is a loan secured against your home which involves repaying both the capital and interest each month. In later life, a traditional 25-year mortgage can be difficult to get accepted, whereas with a later life mortgage the loan can be better tailored to your age and needs.
You can visit our individual product pages linked in the boxes above to learn more about the different types of mortgages for over 50s.
What are the benefits of later life mortgages?
Live more comfortably
You may not have saved up quite enough for everything you planned or could simply want to enjoy a more comfortable life. Mortgages in later life could help boost your finances as you approach or reach retirement and could offer more freedom to live the rest of your life how you want to.
Depending on the type of later life mortgage you take out, that could mean finally taking that trip around the world or putting money towards a loved one’s education fees. Or perhaps you just want healthier finances.
With RIOs and retirement repayment mortgages your home may be repossessed if you do not keep up repayments on your mortgage.
Stay in your home
Over-50 later life mortgages allow you to retain ownership and stay in your own home while still unlocking some of the money tied up in it. You’ll save the hassles that come with selling, buying and moving house. And it means you can stay close to all the things you’ve grown to know and love.
Accessible finance
You might be worried that you’re over the maximum age for mortgage lending or that no conventional options meet your needs. Specialised mortgages for later life could help you find the right terms for you and could improve your chances of getting accepted.
With our lifetime mortgage plans there are no requirements to make monthly repayments, you also won’t need to go through the same affordability checks you would with retirement repayment mortgages.
For retirement interest only mortgages, these are only available to people who are over the age of 50. Read more on RIOs.
And to read more on retirement repayment mortgages, click here.
Lending options
There is an increasing variety of lending options for over 50s, each with their own features and advantages that are worth looking into.
Our lifetime mortgage plans come with a no negative equity guarantee, for example. This means you’ll never owe more than your home’s value and won't pass on equity release related debt to loved ones. You can also speak to our advisers about building in inheritance protection and downsizing protection, which are available on some plans.
With a retirement interest-only mortgage, you could retain more of your home’s value – and therefore potential inheritance money – by repaying interest as you go.
What age can you get a mortgage up to?
There is no single maximum age for a mortgage. Lenders can look at both your age when you apply, and your age when a plan is scheduled to end, with limits varying between providers. Most do have some form of an age cap.
Mortgage lenders have traditionally been reluctant to lend to older people due in part to the affordability checks they have to carry out. Retirement repayment mortgage checks look at income. Lower income can be seen to make a mortgage higher risk for both parties – and reduce options for those in later life as a result.
With later life mortgages however, there aren’t the same restrictions regarding upper mortgage age limits. As long as the youngest homeowner is 50 or over, you could qualify for a RIO, however you'll need to be aged 55 or over to qualify for a lifetime mortgage. Helping those in or approaching retirement increase their options is what we do.
Are mortgages in later life safe?
You should always think carefully about borrowing money against your property. There are various benefits and drawbacks involved from one lending option to the next, so it’s sensible to speak to an expert first. For lifetime mortgages, seeking advice is a regulatory requirement.
That’s where our fully qualified equity release advisers come in. They’ll get to know your requirements, explain your options clearly and point you in the right direction. Crucially, if we don’t think one of our Key branded lifetime mortgage plans is right for you, we'll tell you.
As an independent advisory service, our mortgage advisers can search the whole market, including specialist lenders, giving you more options when it comes to later life borrowing. Whether you're looking for a retirement repayment mortgage or RIO mortgage, our friendly expert advisers can help you choose the option that's right for you.
You can also take confidence in the fact that we’re authorised and regulated by the Financial Conduct Authority (FCA). The FCA’s role is to protect customers and ensure that imtermediaries act with transparency and clarity in mind at all times.
What size later life mortgages could I get?
The amount you could release will depend on lots of factors including:
- How much you want to borrow
- Which type of later life mortgage you apply for
- Your age
- Your general health and lifestyle
- The value of your home
As a rough guide, Key Equity Release customers who took out a lifetime mortgage had access to an average facility of £90,374 in 2019.
You can use our lifetime mortgage calculator to get a better idea how much you may be able to release through equity release.
Use our other free mortgage calculator to see how much you could borrow with a RIO or retirement repayment mortgage. Both are secure, quick and easy to use.
How much do over-50 mortgage services cost?
The cost of our mortgage advice for over 50s varies depending on the product.
Our lifetime mortgage advice relates to our range of Key branded products and is completely free of charge. So, you can find out if it's right for you without it costing you a penny.
For RIO and retirement repayment mortgages, these products are available through Key Group and we charge an advice fee of 1.99% of the amount released, subject to a minimum of £1,499, usually payable when the mortgage completes.
Interest rates also vary between products and are subject to eligibility. You can ask our advisers for a personal illustration.
Choosing the right later life mortgage for you
The right later life mortgage for you will depend on your personal circumstances, including how much you wish to borrow, if and when you could pay it back and how you could pay it back.
Retirement is changing with the state pension changing all the time. While some will choose to continue working, a retirement repayment mortgage or RIO could be an option for borrowing money against your home. However, everyone is different and – particularly in later life – will have a changing level of income as well as lifestyle. Both these types still require you to budget for repayments.
A lifetime mortgage is one option for those who want to access some of the tax-free funds from their home without having to service the loan.
With a lifetime mortgage there are typically no monthly repayments to make as the loan, plus roll-up interest, is repaid when the plan comes to an end. Your home still remains your own and the funds can be spent in a variety of ways. Popular choices include home improvements, paying off an outstanding mortgage, clearing existing debt, travel and gifting.
And as the later life lending market has evolved over the years, so have the plans. With lifetime mortgages, there are now more options for tailoring them to your needs, including drawdown, inheritance and downsizing protection.
With so many options out there for mortgages in later life, plus other ways of raising funds, it’s important you make an informed decision. Our expert advisers can make sure you consider your options and talk you through the finer details.
Whether you’ve stopped working or are coming up to retirement age, the chances are you want your later years to be fulfilling ones.
There are a range of mortgage options that could help you finance the things you want and need to do in life so your later years can be your best ones.
