Mortgage brokers hear this this question every day, “Can you get a mortgage on a pension?”. The short answer is “yes, you can.”
Officially there is no upper limit in age to applying for a pension, lenders do however have their own rules for lending which is based upon the risks involved with lending you the money. In most instances you will need to be able to prove that your income from your pension can pay your mortgage. You can also take into consideration other income too such as investments you may have.
It also can depend on why you need a new mortgage, the obvious reasons being that you may want to:
- Release equity from your home
- Sell your house and rent to gain access to the equity
- Downsize to a smaller home
If you are interested in obtaining a mortgage while you are on a pension then it probably means one of two things:
- You may be borrowing because you are either already retired or you are approaching your retirement and are considering how your pension income will affect mortgage affordability and how you may be assessed for it.
- You could be self employed looking to factor in your pension contributions over the years to see how they affect affordability assessments.
Can My Pension Income Count Toward My Mortgage Application?
Yes. Lenders look at your affordability to repay and assess the risk. They are not allowed to ask you about your health as this is discriminatory. Not all lenders will consider you after age 60 but there are still lenders who have no upper age limit, we recommend you use a mortgage broker to find the best deals.
I Am Approaching Retirement, Can I Get A Mortgage?
A pension backed mortgage is not favourable for all lenders but some will do it, it’s about the calculated risks involved with lending the money to you. Mortgages can be very complicated these days and unless you have taken a mortgage out in the last twenty years you may be surprised by the variety out there. That said, the criteria for lending has not changed too much and pretty much averages to be:
- The type of mortgage you are looking for and your reasons for wanting it.
- Your current situation in regard to retirement and ability to repay the mortgage. If you are not yet retired then your retirement date will be a factor.
- Your age, it’s a sad fact but your age does play a part in the decision process.
- Your income from your pension and other forms of income such as investments.
- What pension deal you have and are there any restrictions that may block your ability for affordability.
- Your credit history is a also a big factor, the better your credit the more likely you are to be approved.
- The type of property you are looking to buy and the LTV (Loan To Value) involved.
I Am Already Retired, Can I Get A Mortgage?
Yes. Most lenders will still lend to you and there are various options available, remember that equity release is an option too. Again, lenders are concerned with the risks involved with lending and this is represented by how you are able to pay off the amount you borrow. Lender will look at your application differently when you are retired versus facing retirement, affordability and the ability to repay your capital portion is a
Interest Only Mortgage For Retired People
One option is that you can take out an interest only mortgage which will keep you monthly repayments low, you still do need a plan of action for being able to pay back the capital part of the mortgage at some point though, this can be done through the sale of your house (for example), other examples are obtaiing a lump sum of money from saving or investments or the sale of other properties you own, this type of strategy is called a mortgage repayment vehicle.
Can I Pay Off My Mortgage With My Pension Pot?
Yes.. You are allowed to take 25% of your pension pot tax free and you are allowed to use this to put toward a mortgage.
Can I Get A Mortgage That Stretches Into My Retirement?
This depends upon how close to your retirement you actually are and lenders have different criteria.
Many lenders will need to know that once you are retired you will still be able to afford to repay the loan, this will likely include projection statements for your pension. In short lenders really just want to be able to see that you will be able to afford to repay your mortgage and this can be done from any income source including your pension, so if you have savings, income from shares, bonds etc or perhaps an investment such as another property which generates an income for you then these can all be taken into account.
Why Does My Age Affect The Mortgage I Can Get?
Some lenders do have a cap on mortgage lending which is 60-65 years old, but some lenders have special mortgages for older people. We recommend you contact a mortgage broker to find the best deal for your situation rather than approach a high street lender yourself as brokers tend to have access to the whole of the lending market and therefore more options that suit your particular situation.
The reason your ages affects the ability to get a mortgage, as already covered in this article previously, is because of the potential risk of not being able to repay the loan. This can be for a number of reasons but older people to tend to have higher care costs at times with larger financial pressure to make ends meet when your income is made up of a pension, this is the reason lenders are happy to take into account your other income as described in previous sections of this article.
Does A Mortgage Lender Consider My Age For The Final Repayment Date Of A Mortgage?
As described above some lenders do have a maximum age of 60-65 while others consider 70-75 and other lenders do not have an upper age limit which means you could borrow beyond 100 years old! This is why it is critical that you consult with a mortgage broker who knows the market and can get you a mortgage which is right for your circumstances rather than using a mortgage comparison site or approaching a lender yourself. A mortgage broker has inside knowledge, experience and access to deals that other professionals simply do not have.
Does The Condition Of My Health Affect My Ability To Get A Mortgage?
The simple answer is lenders are not allowed to discriminate and therefore they should never ask you about your health.
Do I Need Insurance For A Mortgage Pension?
It will be more expensive but it is even more important that you obtain appropriate insurance for a mortgage at this point in your life. This is considered even more important if your mortgage is a joint application and the ability to repay depends upon two incomes, if one income was no longer there then you would need to be able to repay the mortgage repayments and the best way to do this is by ensuring there is adequate cover in place to do so.
If My Partner Passes Away Can The Mortgage Be Transferred?
This depends upon the terms and conditions of your mortgage and also an important factor that you should bare in mind when taking the mortgage on in the first place. This will undoubtedly be one of the saddest and hardest things in life to have to face and it can be made even sadder if you are not aware of what happens in these circumstances regarding your mortgage repayments as well as insurances etc. We really do recommend you become familiar with the rules surrounding your deal.
People Also Ask / Summary:
Can I can get a mortgage at 50 with no deposit?
Yes but 100% mortgages are becoming even more rare. Your best bet is to apply for a mortgage where a guarantor is sufficient, this normally means a family member who must be a home owner needs to be your guarantor for your application to be successful.
Can I get a mortgage after I retire?
Yes, this is covered in greater detail within this article. Please see the information above for more detail.
What is the best pension to get after I retire?
This is why we recommend you speak to a mortgage broker, there are still plenty of lenders who will consider your mortgage application after retirement (not everybody will though) and a mortgage broker will have access to these deals to suit your circumstances.
Can You Get A Mortgage On A Pension?
Yes you can but not all lenders will consider you. A mortgage broker can find you the best deal. You can count your pension pot as part of the application of which 25% is a tax free lump sum. Lenders will assess your ability to repay as their risk assessment and are not allowed to discriminate by asking you about your health.