Later life borrowing

Intro

If you're over 55 years old, you will have a range of different choices available to suit your borrowing needs. Our advisers will take care to fully assess your personal circumstances and lending requirements in order to make a recommendation specifically tailored for you.

What sort of borrower are you?

Existing mortgage borrower

You may be looking to either improve your mortgage deal or perhaps use the equity in your home to borrow more money for a variety of purposes. You may also be on an interest only mortgage and coming to the end of your mortgage term but do not wish to redeem the capital balance at this stage.

Lifestyle planner

Are you mortgage free but looking to raise capital for lifestyle purposes? You may be looking to use your property's equity to maintain your lifestyle in retirement, improve your home or perhaps you have been advised to take out a mortgage as part of your retirement financial planning.

Types of later life lending choices

Standard mortgage-Capital & interest repayment (C&I) or interest only (I/O)

You can take out a standard mortgage as part of the later life lending options. These mortgages will have a set mortgage term, and can be on a capital repayment or an interest-only basis. If on an interest-only basis you would need to repay the capital on expiry of the mortgage term.

Retirement Interest Only (RIO) mortgage

A retirement interest-only mortgage is designed to use your home as a repayment strategy to pay the mortgage balance upon death or moving into long term care. As such, these do not have a set mortgage term. As they have a set monthly interest payment, unlike with equity release mortgages, the interest does not roll up onto the mortgage balance

Equity Release lifetime mortgage

An interest roll up equity release lifetime mortgage is similar to a RIO mortgage but there is no monthly mortgage payment. The interest is rolled up and added to the mortgage balance. The loan is repaid on the occurrence of a life event leading to the sale of the property.

	Standard Mortgage	Retirement Interest Only Mortgage	Interest roll up lifetime mortgage
Is there a fixed repayment term?	Yes The loan term is fixed from the outset.	No The loan is repaid on the occurrence of a lifetime event, which can include acquiring another property as a main residence, sale of the property, moving into residential care or death.	No The loan is repaid on the occurrence of a life event, which can include acquiring another property as a main residence, sale of the property, moving into residential care or death.
Is there a maximum age at term end?	Yes The maximum age at the end of the mortgage is the borrower's declared retirement age, or a set maximum age, depending on the lender.	No	No
Is the borrower required to make monthly payments?	Yes	Yes	No Interest payments are added to the outstanding loan amount.
Is interest rolled?	No	No	Yes
How is the borrowing repaid?	Either on a capital repayment basis, or interest only with a credible repayment strategy, e.g. Sale of the mortgaged property Sale of another property Pensions, investments or savings Overpayments	Proceeds from the sale of the mortgaged property.	Proceeds from the sale of the mortgaged property.
How is affordability / the maximum borrowing amount calculated?	The borrowing amount is based on the borrower's ability to afford the mortgage payments, considering their income and expenditure.	The borrowing amount is based on the borrower's ability to afford the mortgage interest payments for the life of the loan, considering the lower or either their current or future income, expenditure and subject to a maximum LTV. For joint borrowers affordability will be assessed on the lowest earner to ensure ability of the surviving borrower to maintain payments.	The borrowing amount is based on the LTV, and determined by the borrowers age at application.

Other considerations

There are other financial planning matters that may be appropriate to consider first.

Your will and estate planning

You should consider whether you wish to include family members in the discussions or for information, e.g. those to whom you would ultimately leave your estate. We are happy to accommodate this if it is your wish and can do this as a face-to-face meeting or as a telephone conference call. It is very important that you seek independent legal and tax advice as to the potential impact your mortgage arrangements have on estate planning. You can use your existing legal and tax experts, or our advisers can refer you to carefully selected firms that can advise you. It is also sensible to ensure that you discuss your will arrangements. You can speak to your existing wills provider, or we can recommend a firm that can help here also.

Means-tested benefits

If you are in receipt of any means-tested state benefits or could be entitled to any means-tested benefits in the future, it is important that you understand the impact of any borrowing arrangements on these. Further information can be obtained from HMRC, The Pensions Advisory Service or the Citizen's Advice Bureau.