If you are in retirement, don’t despair as mortgages are still available to you with most mortgage lenders on a residential and buy to let basis subject to meeting the lenders criteria.

Residential Retirement Mortgages

The majority of mortgage lenders will lend up until the age of 75 and will take on the mortgage if you are not within 5 years of this age. A residential retirement mortgage will be treated in terms of the underwriting criteria similar to that of a standard mortgage apart from what the lender will require as proof of income. This proof of income will have to be in the form of pensionable or investment income as the lender will not accept income from a self employed source. Examples of the income they will accept are the state pension, private pensions and most will take investment income such as dividends although they may not accept 100% of the investment income – this changes depending on the lender chosen.

Buy to Let mortgages when in Retirement

This type of mortgage is available and the lending criteria are near identical to that of a standard buy to let mortgage. A few mortgage lenders will lend up until the age of 85, the majority will offer interest only deals and proof of pensionable income changes depending on the lender chosen. There are still lenders available in this market place that will not require you to have any income and will not request proof of such – These lenders are limited and the fees charged reflect the lack of competition in this particular niche. If retirement income is provable and in excess of £20k per annum then a wider choice of lenders and deals are available.

Mortgage Example

We have recently submitted a residential remortgage application for a married couple that was in their late 60’s. Their home was unencumbered and they were looking to raise £60k on a £300k property with the capital raising being used for home improvements. Pension income from 5 different sources was provided to the lender which satisfied the underwriting criteria and the lender ignored the exposure to the buy to let mortgages that were in the background. The term was set for 9 years on an interest only basis a s the lender was happy that the equity in the investment properties in the background were sufficient to repay the loan at the end of the mortgage term. (Reference PeckDP)

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