Getting a mortgage when you're retired
How to qualify for a mortgage when you’re retired
When applying for a mortgage as a retiree, there are a few extra things to look out for.
You might have less time to pay the mortgage back, depending on the age you retired.
This can make monthly repayments more expensive. Some lenders have set an age limit for new mortgage applications at 65 to 70 years old. With Lloyds Bank, there are age limits on when your mortgage must be paid off:
- Residential mortgages must be paid off by the time you are 80 years old.
- Buy to Let mortgages must be paid off by the time you are 70 years old.
If you’re already retired, or you will retire during your mortgage term, you’ll need to prove that you can continue to make the monthly repayments.
Retirement income and mortgages
Whether you’re buying a new house at 25 or 65, your lender will want to know that you can repay the mortgage in full.
Some lenders will let you to take out a mortgage that you’ll still be repaying after you have retired. You might also be able to arrange a new mortgage, even after retirement. This often depends on your retirement income.
Retirement income is the name given to money you have coming in after you have retired.
Working out your retirement income
To calculate your retirement income, work out your:
- Expected income from pensions
- Any weekly or monthly state pension payment
- Any other income from property or investments
Make your lender aware of all of these income types when you want to apply.
Proving your income to your lender
When considering your application, your mortgage provider will need to see evidence of your retirement income.
For workplace pensions, you’ll need to provide a pension forecast or annuity statement, as well as a statement for your State Pension.
Retirement-interest only (RIO) mortgages
One option for retirees is an interest-only mortgage. With an interest-only mortgage, you pay only the monthly interest for a fixed period without paying anything off the total amount owed.
Retirement-interest only mortgages (RIO) work in a similar way, but are designed for people over the age of 55 and those who are retired, or planning to retire soon.
You’ll need to show the lender you can afford to make the monthly interest payments to apply for a RIO mortgage and pass affordability checks too.
Repaying a retirement-interest only mortgage
With a retirement-interest only mortgage, the monthly repayments you make cover only the interest.
The money from selling the house often goes towards paying off the mortgage.
With certain RIO deals, you may be able to also pay off a percentage of the actual mortgage as well as the interest. Check with your lender to understand your options.
Calculators & tools
We have a range of mortgage calculators to help you:
- Find out how much you could borrow from Lloyds Bank
- See how much you could save if you make overpayments on your mortgage
- Get an idea how a change to the Bank of England Base Rate could effect your monthly payments
Important legal information
Lloyds Bank plc. Registered office: 25 Gresham Street, London EC2V 7HN. Registered in England and Wales No. 2065. Lloyds Bank plc is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority under registration number 119278.
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