Is it really possible for a pensioner to have a mortgage?
You may be amazed to know that the answer is yes! Many of us are may find ourselves in the position where we enter retirement with a mortgage still to pay and often quite a large balance still owing. If you are one of the many that took out an interest only mortgage in the days when they were freely available, at the end of the mortgage term you will find yourself with the total capital sum still payable. This can be a very worrying scenario for many of us, and as we get older and start thinking about our pensions, coping with a mortgage can be a very worrying problem.
But what options are available?
The good news is that interest only mortgages for pensioners are available so don’t panic and think that you will have to sell your home. How about looking at an Interest Only Lifetime Mortgage?
We’re here to help you find the Best Equity Release Solutions. We compare the whole market to find you the best value equity release scheme plan to suit your needs.
What is Equity Release?
Put simply, equity release is a method for releasing some of the money stored up in your home, without the need to move.
If you are over 55 and can afford to make monthly repayments, this could be the scheme for you. Proof of income is not required and you can raise funds against your property whilst still preserving your inheritance. The Interest Only Lifetime mortgage also does not have the higher interest rates and negative implications of other schemes such as equity release and roll-up lifetime mortgages that are also available. Unlike these schemes, interest is paid monthly and the original balance on the loan remains the same as long as the monthly payments are maintained. The sum borrowed (capital sum) will eventually be paid off when the property is sold.
If you do consider taking a mortgage for pensioners then you should also look at life assurance. Give it some thought and consider whether someone will suffer a financial difficulty if you die i.e. your partner. Insurance can give added peace of mind.
How much can a pensioner borrow?
The maximum borrowing with these mortgages the same as with the equity release schemes – it is based upon age and property value. The older the applicant, the higher the loan-to-value will be and hence the loan. If you are unsure of any of the facts, do consult a professional mortgage specialist who will help you calculate how much you will be able to borrow. Entering into a retirement mortgage is a big decision and could have implications for the entire family, so do consider it carefully. It is important that you find the mortgage that best suits your needs. Another plus point of the interest only lifetime mortgage is that you retain 100% ownership of the property so you will also benefit from any increase in the value of the house.
Can I take some of the equity out of my property?
An interest only lifetime mortgage can also assist people over the age of 55 in freeing up some of the equity tied up in the house either in the form of a lump sum or future drawdown instalments. If you need a lump sum for any reason then a lifetime mortgage that provides a tax free lump sum could be a good option for you.
Obtaining the lowest interest rate is also a big factor when choosing the best interest only lifetime mortgage. With interest only mortgages, the lowest interest rate means the lowest monthly payments. Do make sure that you check the whole of market to get the best deal. Consult with a qualified mortgage advisor or equity release expert to ensure that you compare different lifetime mortgages and get the right deal to suit you throughout your retirement.