Remortgaging When Retired

Retired and wondering whether you can remortgage your home? The good news is lenders do offer remortgages to retirees. Whether you yourself can remortgage will ultimately depend on your unique situation and specifically your income in retirement.

So, how do you know which remortgage products and services are available to you? Don’t worry, we’ve got you covered. Here, we look at the steps you’ll need to take to remortgage your property along with why retirement may affect a lender’s decision for remortgaging. While a high-street lender may offer you more complex eligibility requirements when it comes to remortgaging, it’s important to note there are still options.

Want to know more about other types of lending? See our Borrowing into Retirement Guide.

What Is Remortgaging?

Remortgaging your property means switching your mortgage deal on a property you already own to a new one with a different lender, usually with a better rate and sometimes to release equity. It’s worth noting you can also remortgage a property you already own that doesn’t currently have a mortgage on it to release equity.

There are also product transfers which allow you to change to a new deal but stay with your existing lender.  

The process of remortgaging allows a property owner to pay off any existing mortgage with a new one. A remortgage does not refer to taking out a second charge mortgage (also called a second mortgage) on your property, which exists alongside your current mortgage/first charge.

What Are the Benefits of Remortgaging?

There are many reasons why you might want to remortgage your property. These can include the below.

Better Interest Rates

You may find that you can get a better interest rate by remortgaging your property.A rise in your property's value, or a change in your loan-to-value (LTV) rate, which compares the size of your mortgage with the actual value of the property, could be the reason.

If your current mortgage deal is about to expire but your property hasn't been fully paid off, you should review your remortgage options otherwise you’ll be moved onto your lender's SVR (standard variable rate) which is set by them rather than tracked in proportion to the Bank of England’s base rate. Going onto your lender’s SVR will likely be more costly so it’s worth looking to remortgage if you want to save money in the long run.

More Flexibility

You might require greater flexibility with your mortgage payments. For example, you may have received additional income and want to pay your mortgage off sooner, but your current deal does not allow you to do so. You might also want to pause your mortgage repayments; something you can’t do under the terms of your current mortgage.

Release Equity and Access Cash

You may want to remortgage your property to release some of the equity you’ve built up over time – whether you’re remortgaging for more than the amount remaining on your current mortgage balance or remortgaging a property you don’t have an existing mortgage on anymore.

Releasing equity can free up cash you can use for so many different things – e.g. providing children with deposit money, funding a big expense like a wedding or school fees, home improvements, buying a second home or rental property and more.

Consolidate Debts

When you remortgage, you can potentially add other unsecured debts to your mortgage, such as credit card bills or car finance. This can provide great financial and practical help for those wanting to clear their debts, save themselves stress and organise their finances.

It’s important to note that you could end up paying more overall when you consolidate debt via a remortgage than if you had continued managing your unsecured debts as the mortgage will be spread over a longer term – which means you’ll be paying interest for longer.

Can I Remortgage When Retired?

Remortgaging when retired is possible. In this circumstance the lender will work out your affordability based on your potential monthly income in retirement only. It’s also possible to remortgage if you’re expecting to retire during the term of the mortgage, but in this situation the lender will assess your affordability and income both now and once you retire. If your income in retirement won’t be enough to afford the repayments then the lender may look at shortening your term or discussing alternative options – e.g. a part repayment, part interest-only mortgage, remortgaging onto a different product once you retire, etc.

Can I Remortgage in My 50s or 60s?

If you’re not in retirement but over the age of 55 and considering a remortgage, you should be able to get a normal remortgage based on your working income, assuming the mortgage term ends before you retire. It’s common for lenders to offer remortgages to applicants in their 50s with a standard 25 year term. At this age, when people earn more and have fewer expenses, affordability requirements still apply, however meeting them is usually easier as your income is typically higher than when you’re retired.

Remortgaging after 60 limits the number of lenders you can apply to and the products available, due to maximum age limit criteria (see Over 70s: Can I Remortgage). There are many who will offer to lend, but only for a shorter period.

Is It Possible to Remortgage After 65?

It is possible to remortgage after 65, but it’s best to work with an expert broker like John Charcol who can recommend a lender with suitable requirements and find you the cheapest deal for your circumstances.

High street banks rarely lend to older borrowers, whereas niche providers are happy to help older borrowers refinance.

Is It Possible to Get an Interest-Only Remortgage Later in Life?

It is possible to get an interest-only remortgage later in life. Later-life remortgages that charge only interest are available. These are known as retirement interest-only or RIO mortgages. With a RIO mortgage, you make interest payments each month, not capital payments. You repay the outstanding mortgage amount when the property is sold after you die or enter long term care with no prospects of returning to the residence. If it’s a joint mortgage, then the surviving party will become the sole borrower and can remain in the residence until they die, enter long term care or sell the property.

The lender will need to assess your affordability with a RIO mortgage, to ensure you can meet the monthly interest payments. One main benefit of a RIO mortgage is that you don’t need a repayment strategy like with a normal interest-only mortgage, as the debt is repaid when the property is sold after you die or enter long term care.

How Do Those Borrowing in Retirement Remortgage Their Homes?

The easiest way to arrange a remortgage in retirement is to use a mortgage broker like John Charcol. We know the criteria requirements of lenders from across the market and can find you a deal that works for your situation, no matter how complex. Talk to one of our experts today on 0330 433 2927 or request a call back to discuss your options.

Other Considerations When Remortgaging

Some property owners may find that remortgaging is helpful for releasing equity in your property and finding a better interest rate. However, as with all other financial products, there are a few things that you need to consider before you apply.

1. Change isn't always necessary when it comes to your mortgage. It's possible that you won't get a better deal, especially if you factor in any possible extra fees. For this reason, it’s always a good idea to speak to a broker about what’s suitable for you
2. Mortgage lenders may charge you a penalty (early repayment charge) for remortgaging if you try to remortgage before your current deal ends. Possibly, this could be offset by any savings you might earn from switching providers and rates. You can start arranging your remortgage up to 6 months before your current deal ends to avoid going onto your lender’s SVR.
3. Getting a remortgage with bad credit or inability to make the repayments in the future is unlikely. Lenders will assess your creditworthiness, which could lead to issues with your application

Next Steps

If you require help with finding the best retirement remortgage deal, John Charcol can help. Contact us today on 0330 433 2927 to discuss your remortgage requirements.