Lenders today are much more flexible and accessing a mortgage in retirement is certainly possible, with mortgage products designed specifically for older applicants who want to move, downsize, release equity or refinance.
Pensioners over 65 can get a mortgage, but the types of mortgage available, the length of the mortgage term and the lender’s decision will depend heavily on income, pension stability and mortgage affordability. This article explores the mortgage options available to borrowers over 65, what lenders look for and how to decide which product matches your goals and financial circumstances.
What Mortgage Can I Get as a Pensioner?
Pensioners over 65 potentially have access to several mortgage products:
- Standard residential mortgages
- Retirement interest-only (RIO) mortgages
- Lifetime mortgages (equity release)
- Older People's Shared Ownership (OPSO) scheme
Each option is designed for a different need. It is essential to consult a mortgage broker to get an expert assessment of your financial situation and advise which route is best for you.
1. Standard Repayment Mortgage
Pensioners over 65 can still apply for a standard residential repayment mortgage in the same way as any other borrower. The structure is familiar: you borrow a lump sum and repay both the capital and interest in monthly instalments over an agreed term. Lenders will want to see proof that you can comfortably afford the repayments throughout the term of the mortgage. Instead of relying on employment income, they will evaluate income from pensions and investments.
Where borrowers in their 30s might be able to borrow for a 25- or 30-year term, lenders often shorten the terms for applicants over 65, sometimes limiting them to 10 to 15 years. The shorter the term, the higher the monthly repayment becomes, which can affect affordability. Some lenders also have maximum age caps either at the application stage (for example, you must be under 70 when applying) or term end (for example, the mortgage must be fully repaid by age 80 or 85). This option suits pensioners with a steady retirement income who want to reduce borrowing quickly.
2. Retirement Interest-Only (RIO) Mortgage
A Retirement Interest-Only (RIO) mortgage is designed specifically for older borrowers who want to reduce their monthly payments. With this type of mortgage, you only pay the interest each month; you do not repay a part of the capital. The capital is repaid from the sale of the property when you pass away, move into long-term care or choose to sell the property voluntarily.
An RIO mortgage can be appealing for pensioners who want to reduce their monthly mortgage outgoings while remaining in their home. However, an affordability assessment still applies: you must prove that you can meet the monthly interest payments throughout retirement. Additionally, this mortgage product will reduce the inheritance amount you leave to heirs, as the capital will be repaid from the sale proceeds of the property after you move into long-term care or pass away.
3. Lifetime Mortgage (Equity Release)
A lifetime mortgage is a type of equity release product available to homeowners aged 55 and over. It allows you to unlock a portion of your property's value without selling or downsizing. Unlike a standard mortgage or RIO mortgage, you do not have to make any monthly payments. Instead, the interest is rolled up and added to the loan balance. The mortgage loan amount and rolled-up interest are repaid when the property is sold after your death or when you move into long-term care.
Many lifetime mortgage products now offer flexible repayment features, allowing borrowers to make voluntary payments to control the interest build-up. Lifetime mortgages are regulated differently from standard mortgages and must be arranged through an advisor qualified in equity release products.
This type of borrowing is well-suited to homeowners who want to release funds for retirement income, home improvements or helping children onto the property ladder without worrying about regular monthly mortgage payments. However, this option will also significantly reduce the inheritance you will leave to heirs.
4. Older People’s Shared Ownership (OPSO)
The Older Persons Shared Ownership scheme (OPSO) is aimed at buyers aged 55 and over who wish to purchase a home at a lower cost. Under this scheme, you can buy a share of a home, usually between 25% and 75%, and pay subsidised rent on the remaining portion to a housing association. Unlike standard Shared Ownership, OPSO caps staircasing (the ability to buy more shares) at 75%. Once you reach 75%, you stop paying rent on the remaining 25%.
Because you are only purchasing a portion of the property, your deposit and mortgage requirements are significantly reduced, making OPSO attractive to retirees looking to downsize or move into new-build retirement developments. You still need to pass affordability checks, and you will be responsible for some costs, such as service charges and maintenance fees. This structure allows pensioners to access secure, long-term housing while retaining ownership benefits, without the financial pressure of buying 100% of the property outright.
What Do Lenders Look At?
When assessing mortgages for over 60s, lenders focus on affordability and risk. Here are the key items lenders consider:
Income
Lenders will look at the state pension, private pension, annuity payments, investments and rental income you might have.
Outgoing expenses
Lenders will also consider your existing credit payments alongside cost-of-living expenses.
Age and term length
Given that later-life borrowers have fewer years to pay down a mortgage, lenders must consider whether the borrower can afford the higher payments (if they take out a standard repayment mortgage).
Property value and equity
High equity improves eligibility and available products.
Documentation Lenders May Require
- Pension statements
- Investment or annuity summaries
- Bank statements
- Proof of identity and address
Even though you are not working, pension income and investments count as income for mortgage affordability checks.
Pros and Cons of Mortgages in Retirement
Benefits:
- Enable you to move or release cash
- More later-life lending products exist than ever before
- Some options provide flexibility through interest-only or no payments at all
Drawbacks:
- Lifetime mortgages reduce inheritance
- Standard mortgages may have higher monthly payments due to shorter terms
- You must still pass mortgage affordability checks
Conclusion
Pensioners over 65 can get a mortgage and there are more products available today than ever before. Whether you want to move, release equity or secure lower payments, there is a mortgage in retirement option that fits your financial goals.
The key is choosing the right product based on:
- How much equity you want to preserve for inheritance
- How much income you want to commit each month
With the right advice and preparation, pensioners can make an informed decision about the best mortgage route for their personal situation.
FAQs
Q. Can pensioners over 65 get a mortgage?
A. Many lenders offer mortgage in retirement products, including standard mortgages, RIO mortgages and lifetime mortgages.
Q. How do lenders calculate mortgage affordability in retirement?
A. Lenders will look at your pension income, investments, savings and spending habits to ensure you can maintain payments for the whole term.
Q. Is there an age limit to apply for a mortgage?
A. Many lenders allow applications up to age 70-75, with terms ending by age 85. Specialist lenders may go beyond this.
Q. What mortgage can I get if I am retired and on a pension income?
A. You could get standard repayment, interest-only (RIO) or lifetime mortgages, depending on your income and equity.
Q. Can I get a mortgage with no monthly payments?
A. A lifetime mortgage is an option that requires no payments at all. The mortgage plus the compounded interest are paid when the property is sold after death or when you move into long-term care.
Q. What happens to the mortgage when I die?
A. For RIO and lifetime mortgages, the loan is repaid from the sale of the property.
Q. Should I seek financial advice before taking out a mortgage in retirement?
A. It is essential to seek advice from a qualified mortgage broker to ensure that you chose the best mortgage option for your personal financial situation.
Additional Sources:
https://ukmoneyman.com/can-a-65-year-old-get-a-mortgage/
https://www.legalandgeneral.com/retirement/equity-release/guides/mortgages-in-retirement/
.svg)
.svg){kind=small}
