In this blog we will discuss borrowing and mortgages for the over 60s in Scotland.
Is it possible to get a mortgage when you’re in your sixties?
Yes, but you need to be made aware of a few things.
It can be a bit more difficult to secure lending when you’re over the age of 60, as many lenders have a cut off age. However, the cut off age when it comes to mortgages for the over 60s applies to the age you would be at the end of your mortgage term. So, if a lender has a cut off age of 70, you would only qualify for a 10 year mortgage – meaning steeper payments on a standard repayment mortgage.
Some lenders will also consider your retirement as the cut off applied to your lending.
Mortgages post retirement
Retirement doesn’t rule you out from qualifying for a mortgage. Many lenders will happily offer you a mortgage based on your state/workplace pensions, property, investments, savings or any continual income. We’d suggest working with an experienced mortgage broker to be able to successfully obtain such funding.
Your options
Retirement interest-only mortgage (RIO)
A retirement interest-only mortgage is a great way for anyone looking to downsize or remortgage as they get older. As suggested by the name, the payments will cover only the interest of the loan with the lump sum being payable when you die or require to move into a care facility.
This is a great way to draw some money from your property to subsidise the cost of living, whilst protecting your asset to pass onto your family.
Equity release
Equity release allows you to draw some of the money you’ve paid into your property and effectively pay it back when you either die or sell the property.
There are a couple of different types of equity release:
- lifetime mortgage – taking a lump sum of the equity you have in your property
- home reversion – selling a part of your property to your mortgage lender, but being able to remain in the property until you die or move to an assisted living facility
Equity release is a great option if you don’t want to downsize, but it’s an expensive way to fund retirement. It is usually far more expensive than a mortgage and it is often more cost effective to move to a smaller property. The interest rates offered are often far more costly and can chip away at funds you may need later in life for care or to leave to family members.
The biggest risk, and worst case scenario, would be the sale of the property not covering the loan and interest, resulting in your family shouldering the debt.
Mortgage advice for over 60s in Edinburgh
If you’re over the age of 60 and are exploring your options in relation to mortgages, property investment, equity release or any other type of funding – the experience of a mortgage advisor is well worth considering.
They work with many lenders to find you niche products that you may not have access to directly.
