Retirement Flat

Posted on 25 February 2012 by Su

I am trying to get a mortgage to buy a £45k retirement flat but am finding it very difficult, being told this is mainly because they are 'restricted re-sale'.  I am self-employed so have a variable income circa £12k, plus a private pension of £250 month.  I intend to rent out my existing house (valued at £135k) until prices, hopefully, start going up in a few years time and have found a tenant who has agreed to pay £675per month.  I have an existing interest only mortgage on my home, repayments £245 per month, and would like to borrow £35-40k to buy a retirement flat with the remaining £5-10k deposit coming from my savings.  Can you help please?


These retirement flats are very difficult to place when it comes to getting a mortgage and the majority are bought for cash when people downsize.  The problem for lenders, as you have found out, is the restriction on resale which means that they have less chance of achieving a sale if the property is repossessed.

There are a few lenders who will consider these properties, although you may have to put down a larger deposit than you are considering.  I can imagine that you will need to increase the mortgage on your existing property by either requesting a Further Advance or more likely by remortgaging to provide a larger deposit and take a smaller mortgage on the retirement flat to meet with Lender's requirements.  Whilst this may sound feasible it is also fraught with hurdles that need to be overcome.  Do you have consent to let your property?  If so, does your lender allow you to borrow more money whilst the property is let?  Is there enough equity in your existing property to allow you to borrow more and will your rental income support this?

I believe we can help you through this minefield 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 help you find the right mortgage for 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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