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Can a Pensioner Still Get a Retirement Mortgage?

Pensioners today are facing serious challenges when it comes to just remaining afloat in the current economy, while trying to get a retirement mortgage becomes even harder. Actually, thousands of pensioners on interest only mortgages risk losing their homes as they have no means to pay at the end of the term. With options reducing rapidly, financial experts warn that the UK may soon face another mortgage crisis. But where did it all start, let’s find out.

History of Trouble

About 5 years ago, mortgage lenders were willing to offer loans to retirees. However, new rules meant to avert another financial crisis have seen mortgages for pensioners virtually disappear. Most of these retirees are well educated and well-informed people with clean credit history, but their circumstances dictate that they have to borrow for another couple of years before they can call it done.

Actually, most lenders deny people aged above 75 years mortgages for the fear of a huge bad debt time bomb. The consumer credit society reveals that about 44% of people aged above 60 have not been paying their mortgages consistently in the past 3 years, while about 7% of those aged above 55 are struggling to repay.

Hope on the Horizon for Retirees

Amidst all this pessimism, there is some hope for aging borrowers. Many baby boomers have used their finances to help their parents and children who are struggling, and this is the reason why some financial institutions are willing to lend to them. They actually understand that this generation of pensioner’s only needs a little more time to pay, and they can add the application fees to the loan, which makes it easier for them. 

This idea will certainly bring in new hope into an underserved market. On the other hand, the same group of people has limited options for normal mortgages, but talking to the current lender as opposed to taking up a new mortgage may be a better option. Any borrower wishing to take up a mortgage past their normal retirement age should understand that there would be more focus on evidence of income, as opposed to a younger person. Alternatively, one may choose to downsize and pay a more affordable mortgage.

Lifetime Mortgages for Retirees

While the story is rather a bleak one with regard to retirement mortgage, there is still a bit of hope remaining. In fact with renewed hope come renewed options to the market. There are definitely products on the market that have disappeared. Yet with better regulation and understanding of the market there are also some great options that are starting to appear. Lifetime mortgages have gained a lot of notice recently and this is due to the plethora of options. A home owner that now sits with an interest only mortgage that is due could potentially roll it over into a lump sum lifetime mortgage.

The lump sum covers the existing payment needed and potentially more equity is released depending on the home evaluation. If there is money available the home owner can choose to take it out or not. The downside is that interest will accrue on the new loan, which compounds over time, but no payment is made as it is a lifetime mortgage. The principle can grow and grow until there is no equity left in the home in which case the home upon sale offers no inheritance. 

This is not the best option, but it is one available. 

Home Reversion Saves You from Mortgages

Given the worry about mortgages during retirement you do have the option of protecting yourself. You could decide that as your home is going to be sold to cover the interest only mortgage that you sell a portion of it to a provider of home reversion plans. You gain the funds you need tax free and without any repayment and interest due at the end. As the home is sold in a portion amount it means you live in the home rent free for life. This means you can die in the home or sell it when you move to a care facility. The point is you owe no money to any company. In fact upon sale of your home, the company owes you or your family the remainder of the home value in a payment. This payment is a protected inheritance that lifetime mortgages are unable to provide in most instances. To calculate your maximum release we recommend on using an equity release calculcator. 

Retirement mortgage might be for you. You may find that it works perfect for your needs. If so that is great, but you also know there are other options.

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I was at my wits end and very distraught trying to save my home from a foreclosure while on the home stretch to retirement. It was a very difficult moment for me, but thanks to the timely advice from PMCG Consultants. I not only saved my home, but also paid off the mortage! I will be indebted to you for a very long time.
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Oliver Ferguson
AIKERNESS

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My husband lost his job and we started running late in repaying our mortgage. I started repaying the loan on my own, but I just couldn't keep up with the interest and penalties we had accrued. PCMG intervened and we were able to clear the loan and we're now just about to clear the mortage. Thanks a lot for your assistance.
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Lara Stevens
CHARDSTOCK