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Borrowing later in life can be possible, whether you are moving home, remortgaging, approaching the end of an existing interest-only mortgage or arranging borrowing that will continue into retirement.
Jayhawk Capital advises on residential mortgages extending into retirement and retirement interest-only mortgages.
We consider your income now and in retirement, the property, available equity, monthly affordability and longer-term plans before explaining which routes appear realistic and what needs to happen next.
Mortgage advice for clients approaching retirement, already retired or reviewing borrowing later in life.
Age alone does not determine whether a mortgage is available.
The lender will need to understand whether the proposed mortgage remains affordable, how your income may change and how the borrowing is expected to be repaid over the longer term.
Before considering individual mortgage products, we will take the time to understand:
This helps us establish whether a standard residential mortgage, a retirement interest-only mortgage or another mortgage route within our current service appears appropriate.
The appropriate route will depend on your income, age, equity, property and what you want the mortgage to achieve.
Some lenders can arrange residential mortgages that continue beyond the applicant’s intended retirement age.
The mortgage may be arranged on a capital repayment, interest-only or part-and-part basis, subject to the lender’s criteria.
Where the mortgage term extends into retirement, the lender will normally assess both your current income and the income expected after you stop working.
This could include pension income, annuity income or other income the lender is prepared to accept.
A retirement interest-only mortgage, commonly known as a RIO mortgage, is designed for later-life borrowing.
You make monthly payments to cover the interest charged on the mortgage. The regular payments do not normally reduce the original loan balance unless the product allows and you choose to make capital repayments.
The capital is usually repaid when the property is sold, which may follow the death of the last remaining borrower or a permanent move into long-term care.
You must still demonstrate that the monthly interest payments are affordable.
You may be approaching the end of a current mortgage deal or want to review borrowing that already extends into retirement.
The available routes could include:
The existing mortgage, early repayment charges, monthly cost and longer-term implications should be considered together.
If an existing interest-only mortgage is approaching maturity, the lender will usually expect the outstanding capital balance to be repaid.
Depending on the circumstances, the options may include:
Reviewing the position early can provide more time to establish what is realistic rather than waiting until the final months of the mortgage term.
You may want to buy a property that is more suitable for later life, move closer to family or relocate after retirement.
The lender will consider the purchase price, deposit, expected retirement income, proposed mortgage term and monthly affordability.
Where you are also selling an existing home, the equity released from that property can affect the amount you need to borrow.
A RIO mortgage operates differently from a standard capital repayment mortgage.
With a repayment mortgage, each monthly payment normally covers interest and repays part of the capital. Provided all payments are made as required, the balance should reduce over the mortgage term.
With a RIO mortgage, the monthly payment generally covers the interest only. The original amount borrowed therefore remains outstanding unless separate capital repayments are made.
A RIO mortgage will commonly continue until a specified event, such as:
The exact terms will depend on the lender and mortgage product.
A RIO mortgage is not based only on your age or the amount of equity held in your home.
The lender must be satisfied that you can maintain the monthly interest payments from your income.
This means your pension, employment income, self-employed earnings and any other acceptable income will need to be evidenced.
Because the monthly payments usually cover interest rather than capital, the amount originally borrowed will normally still need to be repaid when the mortgage ends.
This is commonly achieved through the eventual sale of the property.
The effect on the equity remaining within your home and the amount that may form part of your estate should be understood before proceeding.
A RIO mortgage may begin with a fixed, discounted or variable interest rate.
When an initial product period ends, the interest rate and monthly payment may change unless another arrangement is available.
The ability to maintain the payments if rates increase should form part of the affordability discussion.
The lender will consider whether the mortgage is affordable both now and over the expected life of the borrowing.
You may still be working when the mortgage begins.
Where the term continues beyond your expected retirement age, the lender is likely to consider when your employment or business income may reduce or stop.
Self-employed applicants may need to provide accounts, tax calculations and other evidence showing how their income is generated.
Pension income may include state pension, workplace pension income, personal pension income, defined benefit pension income and annuity income.
The lender will decide which sources it accepts and what evidence is needed.
Where you have not yet retired, pension statements or forecasts may be required to show the expected future income.
Depending on the lender’s criteria, other income could include rental income, investment income, income from trusts, ongoing consultancy or professional work, or income from other assets or businesses.
The lender will consider whether the income is reliable, sustainable and supported by suitable evidence.
For a joint application, both applicants’ income and financial commitments will normally be assessed.
The lender may also consider how the mortgage would remain affordable if the household income reduced in the future.
This can be particularly important where one applicant receives a larger share of the household’s pension or other income.
The property must provide suitable security for the lender.
The amount you can borrow may also be affected by:
A large amount of equity can strengthen the overall position, but it does not replace the need to demonstrate affordability where monthly payments are required.
Later-life borrowing should be considered alongside your wider plans rather than treated as a short-term product decision.
Where borrowing is being used to release capital, separate tax, benefits, legal or financial-planning advice may also be appropriate.
This includes understanding:
We will give you time to understand the available routes and ask questions without making the conversation feel rushed.
With your permission, a trusted family member, friend or professional representative can join relevant conversations to provide additional support.
Any third party involved will not be able to make decisions on your behalf unless the correct legal authority is in place.
The aim is to help you reach an informed decision while keeping you clear on the mortgage, the responsibilities involved and the longer-term implications.
We can also:
We begin with the property, current mortgage, amount required and what you want the new arrangement to achieve.
We also discuss your current income, expected retirement income and longer-term plans for the home.
We review the income, expenditure, equity, mortgage term and repayment structure.
Where the proposed borrowing does not appear affordable or another form of specialist advice may be needed, we will explain that before an application is made.
Where there is an appropriate mortgage route to explore, we consider lenders whose later-life criteria appear suited to your circumstances.
We explain the proposed mortgage, monthly payment, costs, principal conditions and how the capital is expected to be repaid.
We remain involved while the lender completes its affordability assessment, valuation and underwriting.
You will be kept informed about where the application stands, what is being reviewed, whether anything further is required and what happens next.
Jayhawk Capital was built around honest advice, accurate preparation and constant client communication. You should understand not only whether a mortgage appears possible, but how it fits with your longer-term position.
Yes, mortgage options can be available after retirement.
The lender will need to establish that the proposed payments are affordable using pension income and any other income it is prepared to accept.
The amount available will also depend on the property, equity, expenditure, existing commitments and mortgage structure.
There is no single maximum age used by every lender.
Some lenders set a maximum age when the mortgage begins or ends. Others assess the application around affordability, income, equity and the individual circumstances.
The available options will therefore depend on the lender and the type of mortgage being considered.
A RIO mortgage is a form of interest-only mortgage designed for later-life borrowing.
You normally pay the interest each month, while the original capital balance remains outstanding.
The loan is usually repaid when the property is sold, commonly following the death of the last remaining borrower or a permanent move into long-term care.
The amount available will depend on your income, expenditure, property value, available equity and the lender’s affordability calculation.
Unlike some equity release products, a RIO mortgage requires you to demonstrate that the monthly interest payments are affordable.
A large amount of property equity does not automatically mean that the full amount requested will be available.
Not always.
Where you are still working but the mortgage will continue into retirement, the lender may consider your current income alongside evidence of the pension income expected later.
The documents required will depend on your age, intended retirement date, mortgage term and lender.
Potentially.
The options will depend on the outstanding balance, property value, income, equity, age and how the borrowing is expected to be repaid.
You may be able to remain with the current lender, extend or restructure the mortgage, move to another lender or consider a RIO mortgage.
It is usually helpful to review the position before the existing mortgage reaches its maturity date.
Yes, later-life mortgages can be considered when purchasing a new home as well as when remortgaging an existing property.
The lender will assess the purchase price, deposit, property, income and proposed mortgage structure.
Where you are selling another property, the expected equity and timing of the connected transactions will also be relevant.
A RIO mortgage can sometimes be used to raise capital against your home, subject to affordability and lender criteria.
Increasing the amount secured against your property will reduce the equity remaining and may increase the monthly interest payment.
The purpose of the funds and the effect on your wider financial position should be considered carefully.
No.
With a RIO mortgage, you normally make monthly interest payments and must demonstrate that those payments are affordable.
A lifetime mortgage is a form of equity release and can allow interest to be added to the loan rather than paid monthly.
The products have different costs, risks and eligibility requirements.
Yes.
With your permission, a trusted family member, friend or professional representative can join a meeting or call to provide support.
You will remain the client and the person making the decision unless someone else has the appropriate legal authority to act for you.
Great customer experience! John was brilliant start to finish and really supported us throughout the whole process. Bridging loans were all new to us so John really took the time to make sure the loan was right for us, along with explaining everything in detail. We had a short timescale and John again made sure this was pushed along at each point in the process
Adviser: John Symons
You may be approaching retirement, already retired, reviewing an interest-only mortgage or considering a move later in life.
Tell us about your property, current mortgage, expected retirement income and what you would like the new arrangement to achieve.
We will review the initial information and contact you to discuss which mortgage routes appear realistic, what further information is needed and whether the requirement falls within the services Jayhawk Capital can currently provide.
Your home may be repossessed if you do not keep up repayments on your mortgage.
A retirement interest-only mortgage requires you to make monthly interest payments. The original capital balance will not normally reduce unless capital repayments are made and will usually need to be repaid when the property is sold.
Jayhawk Capital may charge a tailored broker fee of up to 1% of the loan, subject to a minimum fee of £500.
For residential mortgages, the fee is generally payable when the mortgage offer is issued. The amount and payment stage will be confirmed before you decide to proceed.
Your later-life mortgage may also connect to other areas of property finance. Explore related services offered by Jayhawk Capital.
