For pensioners who may be looking for a mortgage the financial landscape that lays before them can seem anything but straight forward, with information that is difficult to find and sometimes conflicting pieces of advice from various sources. To this end in this guide we introduce you to the sometimes otherwise confusing realm of pensioner mortgages and we answer some key questions that you may have, such as whether pensioners can qualify for a mortgage at all and if so what you can expect from the application process.
In short the answer to this question is yes, although they are very often more expensive and more difficult to obtain. What’s more pensioner mortgages (sometimes known as Lifetime Mortgages for those with an existing home) are applicable to anyone over the age of 55, which is hardly the official age of a pensioner. There is usually a maximum age for the person acquiring the mortgage - for most banks it is usually 73 maximum age. Halifax at the moment have upped their maximum age to 80.
Lifetime mortgages are very much like equity release loans. They allow homeowners to release money from their home to spend on whatever they wish. These lifetime mortgages are repaid when a person dies and the house is sold; lifetime mortgages are not to be confused with mortgages to actually purchase a property and for all intents and purposes are really the opposite.
The recent financial turbulence has seen, quite literally, the rug being pulled from under the feet of thousands of pensioners who have reached the end of a set term on their existing mortgage. Whilst many providers are open to offering interest only mortgages in such circumstances, this is far from the ideal situation as consumers can be stuck paying nothing at all off their debt.
- The mortgage is only paid off when you die, move into long term care or sell your own house.
- You have to prove you can afford the monthly interest repayments.
The main providers that you may consider approaching initially include: Halifax, Nationwide and the Ecology Building Society. Each of these providers are known for offering reasonable terms for pensioner mortgages.
Considering using a broker
If you find yourself flummoxed at the pensioner mortgage landscape despite your best research then you should consult a mortgage broker. These impartial professionals will serve as your knowledgeable go between and will help you find a provider and mortgage that is right for you and your circumstances.
The Future for Pensioner Mortgages
The future of pensioner mortgages may actually look rosier following this year’s announcement of providing pensioners with more control over their pensions. This news, which has seen pensioners now with the option of taking lump sums in advance form their pension, has provided lenders with a little more confidence in pension mortgages. The changes are, as yet, too early to be seen, however a mortgage broker or financial professional will be able to inform you of the current state of the marketplace.
You may want to read about: Equity Release