Is it hard to get a Later-Life Mortgage?

As I sit down to write this blog, I review my personal situation. As someone who is 50, I would never have thought that a later-life mortgage would apply to me now or in the near future…But it does. Mid-life crisis, here I come!!

You see if I plan to retire at 60, and my new mortgage is to run past this, then lenders will wish to ensure I can afford the mortgage post-retirement!

Thankfully, I have a plan to repay my mortgage before I retire, but I am in the minority. Significant challenges are ahead for many; the sooner you plan, the better off you will be.

Taking a mortgage into later life is not ideal. However, living costs are expensive, and paying off your mortgage whilst being young(er) is the last thing on your mind. Day-to-day living is more important, whether this is juggling to pay the bills or the mortgage, ensuring your kids have the life they deserve, loving life and having several expensive holidays each year, or a simple case of living hand-to-mouth for your entire adult life.

Does this ring a bell to you? I suspect it does for many!

But here is the problem.

You are in the last years of your career and want to retire or at least reduce your working life, but you have this noose around your neck, namely a mortgage! Your existing lender will not increase your mortgage term; many lenders have the same criteria. Aaagggghhhhhhhhh!

Where did this come from? It seemed like yesterday you took out the mortgage. You then increase it to upsize or build that extension, or pay off your credit cards! Now, it seems out of control as reality dawns.

I can tell you understand this plight; it suddenly becomes too real.

What are your options?

Sell your family and downsize?

Borrow money from family and friends?

Defer retirement and kick the proverbial can down the road?

Take in a lodger?

Win the lottery?

The good news is that options could be available to you. Some expert advice and careful mortgage planning with specialist Later-Life Mortgage Advisers will get you into a better position, albeit with a compromise, but not always.

How to Increase Chances of Getting Mortgage Later in Life?

A Later-Life Mortgage Adviser will look at every angle, whether it be uncrystallised pensions or entitlement to state benefits or grants.

If these solutions are not viable, then the most popular options are looking at mortgage solutions available to you.

Several lenders offer mortgages to expire at an older age, some to 90. Other lenders offer a Retirement Interest Only (RIO) mortgage with no age-related maximum. The benefit of interest only is that it takes away the repayment cost and, therefore, could be cheaper and more affordable at that time of life. For both solutions, you need to prove that the interest payment is affordable from pensions, investments or other earned income.

Due to a lack of income or because paying interest is not affordable, many people prefer another solution, a Lifetime Mortgage, the most popular form of Equity Release.

A Lifetime Mortgage is not committed to paying a monthly interest payment. Instead, the mortgage capital compounds. While this is not ideal for some, others prefer this option. It does reduce the size of your estate; therefore, your beneficiaries will receive less inheritance than they would have otherwise received. You need to consider the importance of this against your present financial position?

Don’t forget that a debt against your estate, i.e. a mortgage, could also reduce Inheritance Tax, and many use this type of estate planning as a way to mitigate Death taxes.

After reading this, I am sure you are still none the wiser, but having a conversation with a Later Life Mortgage Adviser is a great place to start. Please ensure that your Later Life Adviser is;

• Independent
• Has a fair charging structure. Better still fee-free as we are for mortgage advances of £60k or above.
• Has the specific Equity Release qualifications – very important, so they know what they are talking about
• Has lots of experience in all aspects of Later Life lending
• Understands your position and does not pressure you into making a decision!
• Ensures your children, friends, or beneficiaries are welcome into the meeting, with your permission, so that you have other opinions from those that matter to you and have your best interests at heart!

I hope this helps, and if you need me, you know where I am.

Good luck.

Simon