How do retirement repayment mortgages work?
A retirement repayment mortgage is similar to a conventional mortgage, whereby you make monthly capital and interest repayments until the end of your plan. It can help you unlock tax-free cash from your home’s value and you retain full ownership of your property. Then, at the end of your plan, you’re mortgage-free
In later life, it can be difficult to get accepted for a traditional 25-year mortgage, but with a retirement repayment mortgage, the loan can be better tailored to your age and needs.
How do retirement interest-only mortgages work?
Retirement interest-only mortgages are typically designed for people aged 50 or over. It’s a loan secured against your home and allows you to tap into some of the money built up in your property
Where they differ from a retirement repayment mortgage is that you only pay the interest on the loan each month, then repay the initial loan amount in full at the end of your plan.
How do lifetime mortgages work?
A lifetime mortgage is a loan secured against your home that gives you access to tax-free cash which you can use in a variety of ways. You’ll still own your property but don’t need to worry about making monthly repayments if you don’t want to - although there are benefits to making repayments.
With a lifetime mortgage, you can choose to take all your money in one go to help with larger expenses, such as repaying an existing mortgage, debts or helping family onto the property ladder - just like a retirement repayment or retirement interest-only mortgage.
Or, unlike a retirement repayment or RIO mortgage, you can take your cash in smaller amounts as and when you need it following an initial release through a drawdown lifetime mortgage. That could help if you think you might need access to funds later in life, for example, to pay for care or make home improvements.
It’s important to note, though, that the funds you withdraw later down the line will be subject to the prevailing interest rate at the time, which could be higher or lower than today’s.
What age can you get a mortgage up to?
There’s no single maximum age for mortgage lending. Lenders look at your age when you apply as well as how old you’ll be when your plan is scheduled to end and make their decision on a case-by-case basis, with limits varying between providers. Most do have some form of an age cap, though.
Conventional mortgage lenders have traditionally been reluctant to lend to those in later life due, in part, to affordability checks. Retirement repayment mortgage affordability checks look at income and expenditure. If you have a lower affordability, you can be seen as a higher risk for the lender, which may reduce your options.
With later life mortgages, however, there aren’t the same restrictions regarding the upper age limit for a mortgage in the UK. As long as the youngest applicant is 50 or over, you could qualify for a retirement interest-only mortgage, but you'll need to be aged 55 or over to qualify for a lifetime mortgage
Are the products regulated?
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.
It’s important to remember that for lifetime mortgages, receiving advice is a regulatory requirement. That’s where our fully qualified equity release advisers come in.
By taking the time to understand your needs, our specialist advisers are able to make a recommendation that’s personal to you. And if we don’t believe one of our later life mortgages is right for you, we’ll tell you.
As an independent advisory service, our retirement interest-only or retirement repayment mortgage advisers can search the whole market, including specialist lenders, giving you more options when it comes to later life mortgages.
Whether you're looking for a retirement repayment mortgage or a retirement interest-only mortgage, our friendly expert advisers can help you choose the option that's right for you.
You can call us on 0808 252 9170 if you’d like to discuss your options further. Alternatively, you can request a callback and one of our experts will call you at a time that suits you.
How much does our service cost?
The cost of our advice depends on the product.
Our lifetime mortgage advice relates to our range of Key branded products and our fixed advice fee of £899 is only payable on completion. So, you can find out if it's right for you without it costing you a penny.
For a retirement interest-only or retirement repayment mortgage, these products are available through Key Group and we charge an advice fee of £899, usually payable when the mortgage completes.
Interest rates also vary between products and are subject to eligibility. Speak to our advisers to get a personal illustration.
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