Although many pensioners are eligible for a mortgage in retirement, many are not even considering this as an option, or even aware they could apply for one.
Equity release can be a final solution for borrowing in retirement once all Halifax Mortgage Rates other potential avenues of capital raising have been explored, however equity release can be expensive & sold all too quickly without looking at the alternatives.
It is a common misrepresentation that just because people are near to, or in retirement, that they cannot raise funds via a conventional mortgage.
This is grossly incorrect.
As part of any capital raising initiative, all options must be considered & eliminated as necessary upon discussion between client & adviser. By ascertaining disposable income & the clients future intentions with regards to their property, occupation & selected Current Halifax Mortgage Rates retirement date the adviser can provide recommendations accordingly.
There are two ways that lenders will look at potential mortgage cases: – pre retirement & post retirement income.
Should one still be working, most lenders will consider employment income only up to a maximum age of 65. The amount that could be borrowed would be based on a multiple of income which varies from lender to lender. It can also be based on affordability, taking into account gross incomes & making deductions for any loans, credit cards or other outstanding debt.
However, how does this affect people considering working beyond normal retirement age of 65?
Not to worry, as there are still a few lenders that would permit this & this is where specialist independent mortgage advice should be sought.
For example Leeds Building Society will take into account current employment income into retirement should they be aged under 60, regardless of the normal state pension age. Leeds will actually permit the mortgage term to extend into retirement up to a maximum age of 85.
It must be stressed to the client however that payments must be maintained & this could be difficult should employment cease prior to the end of the selected mortgage term.
However, for some this could certainly be an option should their future pension income still be substantial.
For many lenders though, should the mortgage term extend beyond age 65, then only post retirement income will be considered. This could be income such as a state pension, company & private pensions, investment income etc not reliant on employment. However, due to the lower levels of income at retirement age, this would result in reduced borrowing power into retirement & consequently smaller mortgages.