Lifetime Mortgages For Over 60s

Yes, over 60s can get conventional mortgages, but it depends on the mortgage lender they are with. If a mortgage lender has a maximum age limit, it tends to be 70 years old, so 60 years olds can often take out mortgages without a problem.

However, sometimes, the mortgage lender states that the borrower must be below 70 by the end of the mortgage term. If you are 60 years old and the proposed mortgage term is 10 years or longer, you may not be eligible for that specific mortgage.

It is harder for older people to get conventional mortgages because there is less chance that they will outlive the mortgage term, and this means the lender would not get as much money out of an older customer.

Furthermore, older people are more likely to be retired, so they generally do not have an employment income to rely on. This means lenders may be hesitant to offer money to pensioners, as they worry that they will not be able to make repayments on their mortgages.

It is mandatory to get advice before accepting an equity release plan. All lenders are signatures to the Equity Release Council’s best practices.

What is a Lifetime Mortgage?

Lifetime mortgages are the most common type of equity release plan. They allow homeowners to take out a secured loan that is tax-free and can be spent on anything that the homeowner chooses.

The homeowner does not have to make repayments on the lifetime mortgage, as they would with a conventional mortgage. This means the debt is not an issue while the homeowner is still alive; it is resolved when they pass away or go into long-term care, and the equity release provider sells their home.

Lifetime mortgages come with a different interest rate depending on the specific mortgage in question, and the lender in question. There is usually a fixed interest rate, but sometimes it is variable.

Something to keep in mind with lifetime mortgages is that they work on compound interest, so you have to pay interest on the loan amount and the interest amount at the end of each year.

This does not have to be dealt with while you are alive, but it will impact the inheritance that you are able to leave.

When you take out a lifetime mortgage, you do not have to vacate your home. You get to stay there for the rest of your life or until you enter care, and you will still be considered the homeowner.

Please call our 24-Hour Helpline: 0330 058 1579

Can You Get Lifetime Mortgages For Over 60s?

Yes, you can most certainly get a lifetime mortgage as someone who is over 60 years old, and the restrictions are not the same as they are with conventional mortgages.

This is because equity release lifetime mortgages are actually designed for people who are aged 55 or over. Homeowners under the age of 55 are not able to take out equity from their property.

The reason equity release was created for people above 55 is that it was intended to help people to fund their retirement. This means that it is very helpful for over 60s who have not saved enough for retirement, or who need a regular top-up to the income they are getting i.e. State Pension, private pension, savings, employment income etc.

Furthermore, as the scheme is supposed to last for the rest of the homeowner’s life, it would not be suitable for younger homeowners who have other options available to them.

The compound interest would also be a significant problem for young homeowners, as it would build to a huge amount over the course of their life if they did not repay it.

On the other hand, if you release equity as someone who is over 60 years old, it is easier to commit to staying on the scheme for the rest of your life, and the compound interest will not accumulate as much as it would if you were under 55.

What’s more, with later life poverty becoming more of a problem in the UK, equity release has helped many pensioners to become financially secure after a period of precarity.

Over-60s can often release a large amount of money that they can use to pay their bills on a regular basis, pay off debts, have home improvements, save for care, and various other things.

Please call our 24-Hour Helpline: 0330 058 1579

Pros Of Over 60s Lifetime Mortgages

Firstly, if you get a lifetime mortgage as an over-60, you can change the course of your retirement entirely. Let’s say you are 60 years old and your house is worth £200,000.

Using our equity release calculator, you will find that you can release an estimated £65,000 (1). Or maybe you are 80 years old, and your house is worth £500,000; in this case, you could qualify for a loan worth around £260,000.

You will notice that you can generally access more money if you are an older homeowner, and if you have a more valuable property. However, as long as your property is worth at least £70,000, and you are at least 55 years old, you would be able to get an equity release loan.

This amount of tax-free money could open up a wealth of opportunities for you in retirement. Some people are able to get out of debt and are therefore free to spend their money on things they are enjoy.

Others get to invest their money into their family, whether that means gifting their funds to family members, paying for big family holidays, or not having to work and therefore getting to spend regular quality time with their loved ones.

Secondly, you do not have to repay the money you borrow with equity release, so as an over-60, this is the best scheme you could enrol on if you cannot afford to make repayments.

You will never be hassled to make repayments by the equity release lender, as it is not a requirement to do this.

On the other hand, if you do want to do this, you will not be penalised for repaying the loan, as long as you have selected an equity release plan and lender that would allow you to do this freely.

The best way to do this is usually to get a voluntary repayment lifetime mortgage, but this depends on your personal situation, so speak to an equity release adviser in case they have a better option for you.

If you are over 60 years old and you have a low income, an equity release lifetime mortgage could be a great option for you as you can meet the eligibility criteria regardless of your income.

You qualify for equity release based on your property value and your age, so the amount of money you currently have is not strictly relevant.

This would not be the case if you tried to get a bank loan, whether secured or unsecured, as they tend to loan to people who have a reliable income, which often includes people with a high income.

They are also much more willing to lend to people with good credit scores, and may reject applications from customers with a bad credit rating.

However, when you apply to equity release, you can be confident that you will not be rejected because of a low income or a poor credit rating. This makes the scheme very accessible to people over the age of 60.

Finally, equity release funds do not count as income, so it is less likely that you would have state benefits taken away if you released equity than if you received another form of financial aid.

It goes without saying that non means-tested benefits would not be impacted either way, but certain means-tested benefits (e.g. pension credit, attendance allowance) can be removed if your income increases, but they would not be removed if you took out equity.

Having said that, if you put your equity funds into savings, you could experience problems receiving your state benefits.

This is because if your savings exceed £16,000, you can lose your entitlement to certain benefits, so this is important to remember (2).

Please call our 24-Hour Helpline: 0330 058 1579

Cons Of Over 60s Lifetime Mortgages

Firstly, the compound interest is a huge problem for some homeowners. Though the initial interest rates tend to be low with equity release, if you are not repaying any of the interest, it will accumulate each year and result in a large amount of debt.

The reason this is an issue is that, at the end of the scheme, the equity release provider will sell your property to take the equivalent of the money that you have borrowed from them. If you owe lots of interest, they will have to take all of this money, and your family wouldn’t see any of it.

If you want to make sure that your family does receive a set amount of money when you pass away, you would have to find an equity release plan with inheritance protection.

It would also be wise to get a no-negative equity guarantee, which ensures you never owe more than you borrowed, so your family would not have to pay off your debts under any circumstances.

Secondly, not everyone over the age of 60 would qualify for equity release, as they may not be a homeowner, or their property may not be over £70,000 in value.

The basic eligibility criteria does not change across equity release lenders, so this aspect of equity release is very inflexible.

Though we have mentioned that it can be difficult for over-60s to access conventional loans due to their age, they would not have to own a property to do this, so in this sense, traditional loans can be seen as more flexible than equity-release loans.

Finally, the equity release plans are not always as straightforward as they seem. If you want to get a voluntary repayment lifetime mortgage, you would not necessarily be able to repay money as and when you wanted.

Often, you have to wait a certain amount of time before repaying, and you cannot repay the full amount, or you are capped at an amount that is way below the full loan amount.

Another example is the second home lifetime mortgage. You may first believe that you can choose any second home to purchase with your equity release loan.

However, this property must be approved by the equity release lender, which means you don’t always get your first-choice home. What’s more, you have to live there for half of the year, so it is a big commitment to make.

As the equity release arrangements are more complicated than you may initially believe, some homeowners can invest time and money into researching equity release, only to discover that they do not have as many options as they once thought.

Please call our 24-Hour Helpline: 0330 058 1579

Can You Get a Lifetime Mortgage If You are Below 60?

Yes, you can get a lifetime mortgage if you are below 60, but only if you are no younger than 55 years old, for reasons we outlined above.

However, something to keep in mind is that releasing equity at a young age is usually less profitable than waiting until you are older. The interest rates you are offered may be higher, and the loan amounts may be lower.

There is also less chance that you will qualify for the enhanced lifetime mortgage, which is a type of equity release plan that provides benefits to people who are over a certain age, or have a qualifying disability that interferes with their quality of living.

Can You Get a Lifetime Mortgage If You are in Your 80s?

Yes, it is much easier to get a lifetime mortgage than a conventional mortgage if you are in your 80s. Some equity release lenders will not offer you a loan because of your age, but the vast majority will, and may even offer incentives for releasing equity with them.

If you have enough money to fund the rest of your life, we would generally advise you to not release equity as an 80-year-old, as it would be better to not get into debt in your later life.

However, if you do not have any beneficiaries, or you are in a desperate situation, equity release can certainly be an excellent idea at this stage in your life.

Please call our 24-Hour Helpline: 0330 058 1579

Apply For a Lifetime Mortgage Today

To find the right lifetime mortgage for over 60s, contact us for a free initial consultation on 0330 058 1579. We will explain the eight different types of lifetime mortgage, the pros and cons of taking out a lifetime mortgage, how this may affect you personally, and the alternatives to taking out a lifetime mortgage.

If you are struggling financially and you do not see a way out, please consider a lifetime mortgage as a way to restore your finances.

There is no shame in admitting you would benefit from this, as later life poverty is very common, and it is something that is only becoming more common as the cost of living is rising.

Please remember that your income and credit rating cannot prevent you from taking out equity, so don’t worry if you do not have much money or your credit score is bad. Equity release does not discriminate in the same way that traditional loans do.

In terms of how you can prepare for equity release, we would first advise you to do as much research as possible into the scheme, which may involve reading our website and speaking to people who have released equity.

We would also encourage you to find a regulated equity release adviser to speak to. As you are already on our page, the easiest way to do this would be to head to the ‘contact us’ section, or to call us, and we will tell you more about lifetime mortgages for over 60s.

The main alternative to a lifetime mortgage is to downsize into a cheaper home.  This will free up cash to use for your day-to-day living. However, this would, obviously, mean you must move into a different property.

References

[1] Equity Release Calculator https://www.equityreleasewarehouse.com/equity-release-calculator/

[2] How does equity release affect state benefits? https://www.equityreleasewarehouse.com/help-centre/how-equity-release-affect-state-pension/