Recent mortgage Q&A
What mortgage options exist after you retire?
In the current economic climate more and more people are finding that they still have an outstanding mortgage when they reach retirement. Even with the change in rules on retirement age so that people are starting to work longer, perhaps even into their 70s, mortgage lenders have not quite caught up as most still retain an upper age limit for applications for a mortgage. Therefore there is potentially going to be a growing number of people who get stuck with their mortgage and are not able to change to a different lender, and who could potentially also get stuck in a property if they are not able to port their mortgage to a new property.
Your first step
If you find yourself in this situation then your first step has to be to get advice as everyone’s situation is going to be different. Your first port of call should be to your current lender to find out whether they would be able to move onto a better deal because you are already existing customers. There are a number of lenders who offer loyalty deals that may be appropriate in these circumstances. Once you have ascertained what may be available through your current lender you should then go and speak to a mortgage broker. Ideally you should speak to a broker who specialises in non-standard mortgage applications, or even better would be a mortgage broker who specialises in mortgages for the over-65s.
Manage your expectations
If you take your mortgage into retirement then you are very unlikely to be able to get the sort of deals you may have grown used to while you were working. It is also going to take more time and effort to identify the right mortgage product for you and then apply for it. You will find if you are on a repayment mortgage that things are much easier than if you are on an interest only mortgage as you will be very unlikely to be able to move onto another interest only mortgage and so by switching to a repayment mortgage, you will find that your monthly payments suddenly go up at a time when you really want to be minimising them.
Continuing a mortgage into retirement
The reason why lenders are so averse to lending to people who have retired is because they generally do not have the funding to be able to meet mortgage payments. If you are still working, or have an alternative income source, then there are lenders around who will be more lenient and who will extend mortgages up to 75, and in some cases 80 years of age.
The best solution to dealing with a mortgage after you retire is to do as much as you can before you retire to reduce the payment burden later on. If you can, make overpayments to reduce the amount that you owe, and this will also reduce the amount of interest you pay. Also make the most of mortgage broker advice in the early stages of your mortgage so that you get the best deals.
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