Financial Services – Borrowing Options in Your Later Years.
Retirement can be an exciting time; the start of a new chapter in life. Whilst we will have worked, saved and prepared for this moment for a long time, many of us will find we don’t quite have enough money to fund all of the things we planned to do. Luckily, there are now an increasing number of options for borrowing in your later years, enabling people to stay in their homes for longer and help fund their retirement lifestyle.
Mortgage
One option is a traditional Residential ‘Capital and Repayment’ or ‘Interest Only’ Mortgage. Many lenders have increased their upper age cap limits in recent years, enabling mortgages to now be applied for by people up to 80 years old and allowing mortgage terms that end when a customer is up to 85 years old.
You’ll have a better chance of being accepted for these mortgages if you have a good credit history. Your income will needs to be high enough to easily cover the mortgage payments, so lenders will be looking for proof of a pension income. This is easier to do once you’re retired. However, if you’re yet to retire, your pension provider can give confirmation of your expected retirement date, current pension pot and expected retirement income. The provider will also be interested in other income you may have, such as from shares and property investments.
Equity Release
Another option is equity release. With an Equity Release Mortgage, you can borrow an amount against a part-share of your home, either as a one-off lump sum or a monthly income. You still own your own home, and the payment can be used for a variety of purposes. These are, most commonly, to pay off an outstanding mortgage, pay off a major purchase or unexpected cost, or simply to help fund retirement.
Lifetime Mortgage
A Lifetime Mortgage differs to a traditional Residential Mortgage as payments do not need to be made throughout the term of the mortgage. Instead, the total amount borrowed plus interest is repaid when the house is sold, which is usually after the borrower has moved into a care home or passed away.
Both Equity Release and Lifetime Mortgages will impact elements such as how much inheritance you will have available to pass on, eligibility for state benefits and your tax position. Each of these borrowing options suits different circumstances, so you must carefully consider which would be best for you in later years. You will need to take legal advice before releasing equity from your home as Lifetime Mortgages and Home Reversion Plans are not right for everyone
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP YOUR REPAYMENTS ON YOUR MORTGAGE.
Contact your Local Branch for further guidance on Financial Services.
- Norwich | 01603 619916 | norwich@watsons-property.co.uk
- Aylsham | 01263 733881 | aylsham@watsons-property.co.uk
- Cromer | 01263 515120 | cromer@watsons-property.co.uk
- Holt | 01263 711021 | holt@watsons-property.co.uk
- North Walsham | 01692 404658 | northwalsham@watsons-property.co.uk
- Sheringham | 01263 823201 | sheringham@watsons-property.co.uk
