Many people in their 60s and 70s still have goals to buy a home, move closer to family, or access money tied up in their property. But can a pensioner get a mortgage at 65? The short answer is yes, but the options may differ from those of someone still in full-time work. This guide will help you understand the choices, challenges, and alternatives available.
The age limit for standard mortgages
There’s no law stopping a bank or building society from lending to older borrowers. However, most lenders set their own age limits. For standard residential mortgages, many providers cap the age at which the mortgage must be repaid, often between 70 and 85. This means if you’re applying at 65, your term might be limited to just 5 to 15 years.
This affects how much you can borrow and what your monthly repayments look like. The shorter the term, the higher your monthly costs.
How do maximum term limits affect borrowing
Lenders typically offer terms based on the age they expect the mortgage to end. For example, if a lender has a cap of 75, and you’re applying at 65, the term might be only 10 years. That’s very different from the 25- or 30-year terms younger buyers often get.
A shorter term means your monthly repayments could be high, even if the loan itself is small. That’s why many mortgages for pensioners come with flexible terms or interest-only options.
Mortgages are available to pensioners
If you’re older and need a loan, there are still good options.
Here are the most common ones:
Standard residential mortgages
You can still get a residential mortgage if:
- You have a steady retirement income
- Your credit score is good
These loans work like regular mortgages. You pay back the loan and interest every month.
Some banks may give you a shorter loan term. But others may allow longer terms, depending on your health and income.
Retirement interest-only mortgages (RIOs)
With a RIO mortgage, you only pay the interest each month.
- You don’t repay the loan itself until later.
- This usually happens when you sell your home, move into care, or pass away.
RIOs are made for older people.
- They are often easier to get than normal mortgages.
- They’re a good choice if you want lower payments now.
Lifetime mortgages and equity release
With a lifetime mortgage for pensioners, you borrow money using your home as security.
- You don’t have to make monthly payments.
- The interest is added to the loan.
- The loan is paid off when you sell your home, move into care, or pass away.
This lets you unlock money from your home without selling it. But it can cost more in the long run.
What do lenders look at when you’re retired?
Even though you’re no longer employed, lenders will still look closely at your financial profile. They need to see that you can manage repayments without hardship.
Pension income and affordability
Lenders want to know how stable your retirement income is. This could include:
- State Pension
- Private or workplace pensions
- Rental income
- Investment returns
The more predictable your income, the better your chance of getting approved. A regular monthly income helps show you can keep up with payments, especially on a mortgage for over 65 borrowers.
Credit score and property type
Your credit history still matters. Lenders will check how you’ve handled past debts, loans, or credit cards. A strong credit score shows that you manage money well, which gives lenders more confidence.
The type of property you want to buy can also play a role. Some lenders may avoid properties with non-standard construction, or flats in retirement complexes, as they can be harder to resell.
Loan-to-value (LTV) and deposit requirements
Most lenders ask for a lower loan to value (LTV) ratio when lending to retirees. This means you might need a larger deposit. For example, a 40% deposit may give you better chances than a 20% deposit.
A lower LTV not only helps with approval but may also unlock better interest rates.
Pros and cons of taking out a mortgage in retirement
Mortgages in retirement can work well for some, but they aren’t for everyone. It’s important to weigh up both the benefits and the drawbacks before moving ahead.
Benefits
- Access to property wealth: For homeowners with little savings, borrowing in later life can help unlock money for everyday needs or emergencies.
- Better inheritance planning: Some people use a lifetime mortgage for pensioners to gift money early to their children or grandchildren, helping them get onto the property ladder.
- Downsizing can be intentional: Selling a larger home and using part of the cash to buy a smaller one with a mortgage can free up money while keeping housing costs manageable.
- Keep living independently: A mortgage may help you move closer to family or into a more suitable home without depending on rented accommodation.
Risks and limitations
- Monthly repayment pressure: Even small repayments can put a strain on fixed incomes, especially with rising living costs.
- Impact on inheritance: Loans secured against your property reduce the value of your estate, which affects what you leave behind.
- Potential for negative equity: Some equity release plans might lead to owing more than the property’s value if not managed properly.
- Eligibility hurdles: Some lenders may still turn down older applicants due to age, health concerns, or irregular income.
Before choosing a mortgage for over 65, it’s worth speaking with a broker who understands the options for mortgages for retired people. They can help you balance short-term needs with long-term financial health.
Alternatives to traditional mortgages
If you don’t want a normal loan later in life, there are other ways to get money or help your family buy a home.
Equity release
Equity release lets you take money from your home without monthly payments. It’s an option for people who want to stay in their home and don’t want to worry about paying back right away. But plans can be very different. Always get advice and compare carefully.
Remortgaging later on in life
If you already have a mortgage, switching to a new deal might save money.
You could:
- Get a lower interest rate
- Take out some money from your home
- Change to interest-only payments to cut costs
It’s also helpful if your current deal is ending. This can stop you from moving to a more expensive rate.
Gifting and family-assisted mortgages
Some people use their savings or sell a bigger home to help their children or grandchildren. This can be a kind way to give them a head start. Another option is a family-assisted mortgage.
You can:
- Use some of your savings as security
- Join their mortgage application
This doesn’t give you cash, but it helps your loved ones get approved more easily.
Mortgages for pensioners FAQ
What’s the oldest age you can get a mortgage?
There’s no set legal age limit, but most lenders cap the age at which the mortgage must be repaid, often between 70 and 85. Some specialist lenders may extend this further, especially for lifetime mortgages for pensioners or interest-only deals.
It’s always worth checking individual lender policies if you’re exploring mortgages for retired people.
Can you get a buy to let mortgage when retired?
Yes, you can. Many retired individuals invest in rental properties. As long as you meet affordability criteria and have a good deposit, buy to let mortgages are an option for those 65 or older. Lenders often look at the expected rental income and your broader financial profile.
Is equity release the same as a mortgage?
Equity release is a type of secured borrowing against your home, but it’s not a traditional mortgage. With lifetime mortgages for pensioners, you don’t make regular repayments. Instead, interest is rolled up and paid when the property is sold. It’s more flexible for some, but it can reduce the value of your estate.
Final thoughts
Borrowing later in life is possible, but it’s important to think ahead. Consider your income, future plans, and how it may affect your family. Explore your options carefully and get advice where needed. The right choice should support both your current needs and long-term peace of mind. Speak with a mortgage broker to ensure you understand all the options available to you.