If you are a homeowner in or approaching retirement, you may be considering one or more of a variety of financial options at the moment, from paying off your existing mortgage or other debts, to making home improvements, and gifting funds to your children and grandchildren for their futures.
There is now a wide range of mortgage solutions available exclusively to homeowners over the age of 55, to help you achieve these goals. We established our Later Life Finance Team as specialist advisors in this area of mortgage finance, to provide advice to clients on the options available within this growing market. Here is a brief overview of the opportunities we can help with.
- Retirement Interest Only (RIO) Mortgages
These mortgages don’t have a term, which means you can make interest-only payments for the rest of your life if you choose to. Lenders will assess income, both now and in the future, to make sure the mortgage payments remain affordable even if you face a change in circumstances. This option could be right for you if you want to keep your payments lower than a standard mortgage and you're happy knowing that the loan will be repaid at the point of the sale of your home. It is often an option for those looking to repay an existing interest-only mortgage. Find out more.
- Retirement Mortgages, or Later Life Mortgages
There are a growing range of mortgages tailored specifically for older homeowners. These mortgages can include special terms, for example certain products are only available to those over a certain age, and some are available for homeowners up to the age of 85. These mortgages may have a fixed term, so will need to be repaid at some point in the future, but they can be a helpful tool if you are in or approaching retirement, especially if you have an existing mortgage coming to an end, or you need to fund a particular need over a certain number of years. Find out more.
The modern form of Equity Release, a Lifetime Mortgage enables you to continue to fully own your home, whilst also releasing a lump sum of tax-free equity from the value of your property. These types of mortgages allow interest to roll up on top of the loan (unless you decide to make payments) which offers you flexibility in how you manage both the equity you release and your mortgage. The options in this market have increased significantly over the last few years, and the cost of borrowing has reduced. The practical applications of a Lifetime Mortgage are wide ranging, from funding simple home improvements and providing assistance to children and grandchildren, to complex Inheritance Tax planning. Find out more.
- Over 55 Buy to Let Mortgages
Similar to a Lifetime Mortgage, this option allows landlords to structure their borrowing in a different way if they wish. Older landlords may want to use this product to maximise income from existing property, to consolidate other debts, or to help expand their portfolio. Find out more.
A number of bridging lenders have recognised the needs of older homeowners when they are moving home. The process can be stressful, especially when downsizing, and a simple short-term loan can help relieve the pressure. The retirement living market is growing, and many offer part exchange schemes to help facilitate a move, however our research shows that a short-term loan is typically much cheaper than part exchange. Find out more.
- Getting advice is essential
Our Later Life Finance expert, David Forsdyke, says: “Product choice in the Later Life Finance market increased dramatically during 2020. This rapid expansion and recent product innovation mean it is more important than ever to seek out trusted advice. Here at Knight Frank Finance we are a whole-of-market broker, which means we specialise in all types of property finance. We will take the time to go through the full range of options available to you, so you have a complete understanding of your choices and the relative costs involved. In some cases, a Later Life Finance product may not be right for you, and our team can assist you in securing another type of mortgage solution instead. We’d be delighted to help you achieve your financial goals.”
David runs the Later Life Finance team at Knight Frank Finance. If you would like to talk to David or a member of his team please get in touch by email david.forsdyke@knightfrankfinance.com or by calling 01483 947764.