When it comes to mortgages, we talk quite a lot about later life lending options. That isn’t just because we enjoy working with older clients, but because demand is on the rise for mortgages aimed at older people. Thanks to the economic climate, the housing market and the healthcare system keeping us alive longer, more people are moving later in life, finding that dream home or downsizing to something more suitable for their retirement. But a question we get asked a lot is ‘how does later life lending differ from normal mortgage lending’ – and we’re going to answer it today.
What Is Later Life Lending?
Put simply, later life lending is the umbrella term for any mortgage product aimed at homeowners over the age of 55. It’s given its own section in the mortgage world because there are a wide range of reasons people of this age may want a mortgage, and the selection of products available is a bit different. For example, someone over 55 might want to borrow because:
- It’s a viable alternative to using other assets
- Can be used to supplement retirement income
- Free up capital for holidays, cars, home improvements or gifting money to family
- Repaying an interest-only mortgage taken out years ago
- Restructuring old debts
- Retirement planning
And many more besides. While some of those options could be covered by a traditional mortgage, the majority need something a little more specialist, which is where later life lending comes in.
Your Mortgage Options
Later life lending can generally be split down into 3 types of mortgages. This might not sound like a lot, but it gives you a range of options to fit almost any circumstances. By working closely with a mortgage broker you can understand which option would work for you, and find the most suitable deal at the same time.
Standard Mortgage: Of course, there is nothing stopping people over the age of 55 from applying for and receiving a standard mortgage. Mainstream lenders may be more reluctant to lend to older borrowers, or offer shorter repayment terms, but they can be produced through mortgage brokers.
Retirement Interest Only (RIO) Mortgage: A Retirement Interest Only (or RIO) mortgage is a loan that’s secured against your home. It works by having your monthly repayments cover the interest of the loan. The full amount of the loan isn’t repaid while you live there but is due either on your death or when you move out of the home and into long-term care – whichever comes first. And as always, if you don’t keep up the repayments then your home may be repossessed. There are some strict criteria for this mortgage, and you can usually only take one out through a mortgage advisor.
Lifetime Mortgage / Equity Release: A lifetime mortgage, also known as equity release, is a way to unlock the capital that’s already tied up in your home. With this type of mortgage, you can access a lump sum of money and one of the many options is not having to make monthly repayments. Instead, the full amount is due either on your death or when you move out of the home and into long-term care – whichever comes first. Equity release isn’t available to anyone under the age of 55, and while it is much more regulated than it once was, we always recommend speaking to a mortgage broker before taking out a lifetime mortgage.
At GP Norgate Financial Solutions we believe in good, easy-to-understand advice no matter what your situation. We specialise in later life lending because we believe mortgages should be accessible to all, no matter what the circumstances. Because we have access to a wide range of lenders and products, we are able to access specialist lending products not available to your directly. This means we can help to get you the right mortgage for you. If you’re over the age of 55 and have been struggling with getting a mortgage, we’d love to help. Just get in touch with the team today to book your, no-obligation consultation.
GP Norgate Financial Solutions are a trading style of Easy Street Financial Services Limited who are responsible for the advice.
Lifetime Mortgages are applicable to over 55s only, may affect means and state tested benefits and can affect the inheritance you may leave. Equity release includes Lifetime Mortgages and Home Reversion Schemes. Easy Street Financial Services Limited can advise and arrange Lifetime Mortgages and will refer to an approved specialist for Home Reversion schemes. To understand the features and risks, please ask for a personalised illustration. Check that this mortgage will meet your needs if you want to move or sell your home or you want your family to inherit it. If you are in any doubt, seek independent advice.
GP Norgate Financial Solutions is a trading name of Easy Street Financial Services Limited which is authorised and regulated by the Financial Conduct Authority. Easy Street Financial Services Limited is a company registered in England and Wales with company number 6430453.
The registered office address is Basepoint, 377-399 London Road, Camberley, Surrey, GU15 3HL. There may be a fee for mortgage advice. The precise amount will depend upon your circumstances.
Your Home (or property) may be repossessed if you do not keep up repayments on your mortgage or any other debts secured on it.