Mortgages in Retirement

Posted on 9 December 2011 by Jennifer

My husband and myself are seperating but still live under the same roof until the house is sold. I hope to come out of the sale with roughly £100.000. I don't want to rent a property for myself and would like to buy a small 2 bendroom property, but I don't want to use all of the money from the sale of my house. Could I get an interest only mortgage even though I only have a state pension coming in. I would like to put a deposit down of about £40.000 therefore leaving me about £60.000 to see me through my old age. I just don't want to throw my money away by renting.


As a single woman you will be entitled to a maximum basic state pension of £102.15 per week, equivalent to an annual income of £5311, which would allow you to borrow around £20,000.

There are however, currently very few lenders who will consider lending beyond your 75th birthday and this could leave you in the position of having to sell your house to redeem your mortgage if you are not careful.

The alternative to a standard residential mortgage is an Equity Release mortgage.  These differ from the norm because the interest is not repaid monthly, but rolls up and is only repaid on the sale of the property or if you move into long term care.  Whilst this keeps your monthly outgoings down, it can mean that the amount outstanding on repayment is substantially higher than the original mortgage loan. How much an Equity Release provider will lend is based on your age and the property value rather than your income. These types of mortgage should only be considered after you have taken independent legal advice and consulted with any potential beneficiaries of your estate.

I believe we can help you and that you would benefit from speaking to one of our independent mortgage advisers.  Please call 0344 346 3672 and tell the consultant the date and title of your question, they will then be able to advise you on your situation.


Answers provided in response to Ask the experts are based on the information provided and do not constitute advice under the Financial Services & Markets Act. They reflect the personal views of the authors and do not necessarily represent the views, positions, strategies or opinions of John Charcol. All comments are made in good faith, and John Charcol will not accept liability for them.

We recommend you seek professional advice with regard to any of these topics where appropriate.

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