Later Life Mortgages

Discover the Secrets of Later Life Lending: What's It All About?

Contributors: Nicola Date, Katherine Read. Edited by Rachel Wait & Reviewed by Francis Hui

Aged 55 or Older? Discover the Secrets to Unlocking a Stress-Free Retirement Through Later Life Lending. The Answer May Be Simpler Than You Think.

Before You Start Reading...

Let's See How Much You Can Release 👇


Equity Release Calculator

Value of Your Home?


Drag me

🔒 100% Secure & Fast. Takes Just 8 Seconds.

As Featured In
yahoofinance marketwatch
Later Life Mortgages

Later Life Mortgages in Dec 2021

Are you one of the 17% of UK retirees who have no savings? If so, you’re probably looking for a solution to supplement your income.

Do you own your home? Perhaps, a later-life mortgage could be the answer you’ve been looking for.

However, with so many options on the market, it’s not easy to decide where to turn.

Fear not! We’ll help you discover:

  • The various retirement mortgage options.
  • How to select the right mortgage for you.
  • The risks involved in later-life borrowing.

Our expert team has analysed all the latest plans available on the regulated market to bring you the newest information available in Dec 2021.

Are you wondering if a later life mortgage could be the financial decision you’ve been looking for? Let’s take a look!

what is a later life mortgage

What’s a Later-Life Mortgage?

A later-life mortgage is an umbrella term for forms of borrowing money into retirement in which you trade the equity in your home for cash. There are a variety of retirement mortgages available, each with its own set of terms, but they all assist you in funding your retirement. You may either make monthly payments to pay off the debt or just cover the interest.1 

Interesting Read: What’s the Difference Between a Lifetime Mortgage & Equity Release?

why might i need a mortgage in later life

Why Might I Need a Mortgage in Retirement?

You might need a retirement mortgage if you discover that you won’t have enough money to live the life you desire in retirement. It’s not uncommon for individuals to own property, but not live comfortably every day due to a lack of pension income or insufficient savings.

what age can i apply for later life mortgages

What Age Can I Apply for Later Life or Retirement Mortgages?

You can apply for a later-life or retirement mortgage if you are approaching or have already reached retirement age. Typically, they’re available for homeowners from the age of 55. You’ll usually need to be receiving a pension, and your property must be your primary residence.

In recent years, many banks and building societies have increased the upper age limit for a later life mortgage, or have not set one at all.

What are the Later Life Lending Options?

The later-life lending options are standard mortgages, retirement interest-only mortgages, lifetime mortgages, home reversion schemes.

Standard Mortgage Features:

  • Take comfort in the fact that your fixed-term mortgage will be paid off at the end of the term.
  • There are many alternatives to choose from; you may pay off part of the loan each month so that it is completely paid off by the end of the term, or you can just pay interest and then repay the amount you borrowed after the agreed term.
  • If you apply for a mortgage, the lender will want to know if you can afford to make the monthly instalments from your income or pension for the whole term.

Retirement Interest-Only (RIO) Features:

  • You’re only required to pay back the interest and not the loan itself. By repaying the interest monthly, the amount you owe never increases.
  • Since you’re only paying back the interest, the amount you owe will generally be lower than your typical mortgage.
  • There is no limit to how long you can leave your mortgage outstanding; however, if you pass away or enter long-term care, the loan must be repaid – typically by selling it.

Full Article: What’s a Retirement Interest-Only Mortgage?

Equity Release – Lifetime Mortgage Features:

  • Despite releasing equity, you’ll still retain 100% ownership of your home with these lifetime mortgages for pensioners.
  • The cash is tax-free.2 You may use the money as you wish, whether it’s to assist friends and family, go on a dream holiday, or even make home improvements.
  • If you have mortgage payments outstanding, you’ll need to use some of the money you release to pay it off.
  • You won’t have to pay back the loan during your lifetime, and you may either pay the interest each month or let it roll up.
  • The loan (and interest) is then repaid, usually from the sale of your home, when you pass away or move into long-term care.

Full Article: What’s a Lifetime Mortgage?

Equity Release – Home Reversion Plan Features:

  • You will sell all, or a portion of your home and receive a lump sum or regular income as compensation.
  • You’ll receive the cash tax-free.
  • You may live in your house rent-free if you take advantage of this offer, but you will still have to pay to maintain it.
  • When your home is sold when you pass away or enter long-term care, the lender will take their cut, and the balance will go to your heirs.

Full Article: What’s a Home Reversion Plan?

which is the best retirement mortgage

Which Is the Best Retirement Mortgage? 

The best retirement mortgage options will depend on your personal circumstances. A lifetime mortgage is the most common and you can leave a greater inheritance with a retirement interest-only mortgage. Your best bet is to get in touch with a whole-of-market financial adviser who can help

You should also base your decision on how much capital you require at first, your age, income, and property value.

Discover: What’s a Lifetime Mortgage?

who are retirement mortgages for

Who Are Retirement Mortgages For?

Retirement mortgages are designed for UK retirees who want or need to use the cash in their home, whether it’s to supplement retirement income, help children, or desperately pay off a mortgage or debt.

If you find yourself in any of the following situations, you may require a retirement mortgage:

  • You desperately need to repay your mortgage.
  • You’re relocating to a bungalow, retirement community, or closer to your children for help.
  • You want to help your children purchase their first home or leave an early inheritance.
  • You want or need to renovate your home.
  • You have a bucket list that needs fulfilling, whether it’s buying a new car or taking that dream trip.
  • You don’t have sufficient income to get you through retirement.

MUST READ: 15 Most Common Equity Release Uses

will i be able to get a mortgage when im over 50

Will I Be Able to Get a Mortgage When I’m Over 50?

It will be difficult to get a mortgage at over 50 because lenders consider that your income will soon be dropping as you approach retirement. However, you can qualify for later-life mortgages when you are aged 55 and older.

how does a later life mortgage differ from a regular mortgage

How Does a Later Life Mortgage Differ From a Regular Mortgage?

What’s the difference between a retirement mortgage and a regular mortgage? A later-life mortgage is used to unlock cash, whereas homeowners typically take out a regular mortgage to purchase a home. The most important aspects are similar. The bank will want to ensure that the property has enough value to cover the amount it’s lending, and might require proof of income, if applicable.

However, the goal of a standard mortgage is to repay more of it to own the property outright, but with a later-life mortgage, you’ll usually use the equity from your property, and it’s paid off when you die.

what are the risks of borrowing in later life

What Are the Risks of Borrowing in Later Life?

There are risks when borrowing in later life. The main risks of borrowing in later life is that you’ll leave a smaller inheritance and that you could unlock too much cash in one go, draining all the equity in your home. .


  • Below Market-Value Offer – Since you’ll continue to live there, you’re effectively tying up the bank’s new asset for a while.
  • Reduced Inheritance – You’ll be using the cash tied into your asset, therefore leave less to your loved ones.
  • Benefits Impacted – A lump sum might impact any means-tested benefits or local authority grants you receive.
  • Terms & Conditions – It’s vital to verify the fine print of the agreement.
  • Compound Interest – If you don’t pay off the interest on a lifelong mortgage, it will accrue over time.
  • Monthly Payments – If required, you must ensure you have the means to repay all monthly payments.

You must listen to suggestions given by a professional financial adviser and select a product that is right for you. It would also be beneficial to talk with your friends and family first.

Interesting Read: Is Equity Release Worth the Risk?

how do i apply for a mortgage in later life

How Do I Apply for a Mortgage in Later Life?

You can apply for a later-life mortgage by getting in touch with a whole-of-market financial adviser or a lender. Before meeting with the adviser, it will be beneficial to have personal information to hand, such as your income figures from any pensions or other savings, outstanding debt, or insurance coverage.

Discover: The Best Lenders in Dec 2021

What Documentation Is Needed for a Retirement Mortgage?

The documents you need for a retirement mortgage will depend on the plan you select and your employment status. These may include P60s, a state pension forecast, occupational scheme pension forecasts, business trading accounts, a pension letter, 3 months bank statements and SA302s.

Take note:

If you’re opting for a mortgage for retired people that requires repayments, you will need to go through affordability checks.

Following the mortgage market regulator’s (MMR) review of the sector in April 2014, it is now up to the lender to show affordability in such cases; therefore, careful inspections will be made. Providing such documentation before retirement is generally required by lenders in such instances:

  • Employer and Self-Employed: P60s will be required if you work, as well as a state pension forecast, and any occupational scheme pension forecast (to verify future income in retirement).
  • If you operate a business, most stockbroking firms will ask for 3 years’ worth of trading accounts before opening an account. You may also need to submit SA302s and a pension forecast.

If you are already receiving a pension, lenders may request the following documents:

  • A copy of your last Department of Work and Pensions (DWP) State Pension letter.
  • Your last 3 months’ bank statements as proof of receipt of pension income.

Some lenders may accept investment income and drawdown funds as an acceptable source of income for your mortgage application, although not all do.

What Are the Alternatives to Borrowing in Later Life?

The alternatives to borrowing in later life include digging into your savings, downsizing to a smaller or cheaper home, seeking support from friends or family, looking into local grants or means-tested benefits that you’re eligible for.

DISCOVER: A Comprehensive List of Equity Release Alternatives in Dec 2021

mortgage calculator

Mortgage Calculator

Are you wondering how much cash you could be eligible to unlock through the various later life mortgages? We’ve got the most accurate mortgage calculators in the UK for you to try.

Just fill in a few details, and our expert team will email you with an estimate of the maximum amount of equity that you could be eligible to borrow.

Try Now: Our Equity Release Calculator

Try Now: Our Lifetime Mortgage Calculator

Try Now: Our Retirement Interest Only Calculator

The whole process takes just 8 seconds!

In Conclusion

While we all imagine a financially stress-free retirement, it’s easier said than done. In today’s world, it’s becoming more and more expensive to equip oneself for the financial challenges that come with retirement.

If you’re heading towards retirement and you don’t know how you’ll cope financially, using the equity in your home is an ideal way to enjoy your golden years.

Wondering how much cash is tied into your home? Try our FREE later-life mortgage calculator now.

Editorial Note: This content has been independently collected by the SovereignBoss advisor team and is offered on a non-advised basis. Sovereignboss may earn a commission on sales made from partner links on this page, but that doesn’t affect our editors’ opinions or evaluations. Learn more about our editorial guidelines.

rachel w

Rachel Wait
Personal Finance Journalist

Rachel is an experienced finance journalist and editor with a particular interest in personal finance and consumer affairs. She has vast experience writing about money issues, property, insurance, and consumer affairs, and you’ll find her articles regularly featured in top media and newspaper publications.
john lawson profile.jpg

Written by
John Lawson
Founder SovereignBoss

John is passionate about education and has made it his life-long mission to assist UK citizens on their future financial options, with a specialist interest in equity release, and SovereignBoss is the natural extension of this passion.

Reviewed by
Francis Hui
Senior Risk Manager

Having held various high-level roles across the industry, Francis is truly an expert in aiding UK citizens in their financial decisions and risk analysis. His unique insight and statistical knowledge make him the perfect person to help you take your financial future to the next level.
kath icon

Katherine Read
Consumer Affairs Writer

Since joining the editorial team at SovereignBoss, Katherine has become focused on bringing transparency to finances and opportunities for those approaching retirement age. She writes on the topics of equity release, home reversion, and mortgages.

Nicola Date
Writer & Journalist

Nicola is a financial writer for SovereignBoss and is passionate about the opportunities that equity release can open up for homeowners. Her extensive business experience and deep understanding of the industry means that she’s always up-to-date with the latest developments.

See How Much You Can Release 👇

Use the QUICK form below.


Equity Release Calculator

Value of Your Home?


Drag me

🔒 100% Secure & Fast. Takes Just 8 Seconds.

As Featured In
yahoofinance marketwatch