Interest Only Mortgage News

The Equity Release Safety Net for Those Reaching Retirement Age with a Mortgage

September 25th, 2013

Statistics show that today more people than ever before are carrying their mortgages into retirement. What was once almost considered a financial secret is now fairly common practice. The truth is that changing social and economic trends mean that many of us are simply not able to repay our mortgage until retirement age. There are many options for those who are left with a mortgage during retirement. One may be able to remortgage with a niche retirement mortgage such as the now withdrawn Halifax pensioner mortgage. Other options include taking out equity from the house to pay off the mortgage.

Retirement is thought of as the golden period of life, when one can enjoy the fruits of one’s life’s work. Paying of a mortgage before retirement is usually an important life goal, and reaching retirement age with an outstanding balance can be a big blow and often be demoralising. There are many factors why more and more people are reaching retirement without being able to pay off their mortgages. As inflation is on the rise, wage inflation is low. This means that people are able to get on the property ladder much later than before. Cultural factors and people’s attitudes to borrowing and debts are also changing.

As these statistics are on the rise, lenders’ attitudes towards retirement lending solutions are currently lukewarm at best. Most lenders are not willing to stretch mortgages beyond retirement age, and will want a repayment vehicle. It is possible to find lenders who can stretch the term and extend it by some years depending on specific terms such as age and income. Stretching the mortgage term can buy valuable time to find ways to repay the mortgage, such as remortgaging the property on an interest only lifetime mortgage like the Stonehaven equity release mortgage.

Another way to go is to release equity from the house. Equity release lenders consider the value of the property and the age of the youngest applicant. They do not require proof of income and are not dependent on income. This means that even if your retirement income is too low to get an interest only mortgage, you could still be able to opt for a roll up equity release scheme.

Equity can be released in a lump sum or in ad hoc payments by use of a drawdown facility from a lifetime mortgage scheme. Equity released in a lump sum could be used to pay off the pre existing mortgage and have no more monthly payments to make. This is how equity release could be used as a safety net by pensioners with a pre-existing mortgage. In fact, there are many options available to those who reach retirement age with a mortgage, whether it is interest only retirement mortgages like the Stonehaven pensioner mortgage, or equity release roll-up plan. An independent equity release adviser can help you understand the different options and move forward with your financial planning for retirement.