Getting a mortgage aged over 55
The most important thing to remember when you are trying to get a mortgage if you are over 55 is that you need to be able to prove to the lender that you will be able to make the repayments. As you are more likely have a shorter mortgage term, and therefore higher payments, this can be significant. If you are planning on retiring, you will need to be able to prove that your income from your pension, investments and annuities will be able to cover your repayments.
The main difference between an equity release plan – such as a lifetime mortgage – and a regular mortgage for over 55s is that instead of having the loan for the rest of your life, you can choose the length of time that you want the loan to last. You must be able to pay the loan off at the end of the term, however, and be able to show the lender that you have a repayment strategy. For most people, this will be the sale of the property, or selling of another asset.
With an over-55 mortgage, you also have no safeguards against problems with meeting your mortgage repayments. Unlike an equity release plan where no payments are required, a mortgage for over 55s requires regular monthly repayments to be met. That means that your home is at risk if you can’t manage to keep up your mortgage repayments.
One advantage that an over-55 mortgage has over an equity release plan is that the accruing interest is covered by the monthly payments; this contrasts with lifetime mortgages where the interest is rolled up over the years and repaid the property is sold, sometimes substantially reducing the value of any inheritance from the property sale.