Getting a mortgage when you're older or in retirement
Later-life lending options, including standard mortgages, retirement interest-only mortgages and equity release
Getting a mortgage when you're older or in retirement can be tougher, as lenders often have strict rules around age and income. Yet you've still got options – and once you reach 55, extra choices open up too. This guide explains how later-life lending works, what your options are and, importantly, the cheapest ways to raise cash.
Can I get a mortgage in retirement or near to it?
It's perfectly possible to get a mortgage if you're older, approaching retirement or already retired.
However, there are a few things worth bearing in mind:
Some mortgages have a maximum age by which they must be fully repaid.
The size of your pension may impact how much you're able to borrow.
Certain types of mortgage are only available to those aged 55 and over – and these can be more flexible than other mortgages around age limits, affordability and repayment.
What can I use a mortgage in later life for?
People borrow in later life for all sorts of reasons – not just to buy property. Depending on your circumstances, it may be possible to use a mortgage or other type of later-life lending product to raise money, replace an existing mortgage or unlock cash tied up in your home.
Some common reasons for borrowing later in life include:
- Buying a property (including second homes and buy-to-lets).
- Replacing an existing mortgage deal (remortgaging).
- Carrying out home improvements.
- Debt consolidation (see our Shift debts to your mortgage? guide).
- Replacing an expiring interest-only mortgage.
- Funding a more comfortable lifestyle or retirement.
- Gifting to loved ones (make sure you're aware of the Inheritance Tax implications).
What are my mortgage options in later life?
Generally, there are three main mortgage options if you're nearing or already in retirement. The right option will depend on factors such as your age, income, whether you want to make monthly repayments, and how important it is to preserve inheritance.
If you're unsure, getting guidance can help you compare the costs and risks.
1. Capital repayment mortgage
In other words, a mainstream, 'normal' mortgage where you gradually repay both what you borrow and the interest. Don't rule this option out just because you're older, as it's usually the cheapest and least risky route:
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A strict affordability test will determine if, and how much, you can borrow.
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Some lenders have a maximum age by which the mortgage must be fully repaid.
2. Retirement interest-only mortgage
Normally only available to those aged 55 and over, retirement interest-only mortgages are more commonly offered by building societies than major banks, so choice can be limited:
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You only repay the interest each month, so affordability checks are usually less strict.
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This type of mortgage is typically more expensive overall than capital repayment.
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The mortgage normally only needs repaying when you die or move into long-term care.
3. Equity release
Again, only available to those aged 55 and over, there are two types of equity release:
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Lifetime mortgage. Here, you borrow money against the value of your home. The loan, plus rolled-up interest, is repaid when you die or move into long-term care.
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Home reversion plan. Here, you exchange a share of your home for a cash lump sum. When your home is eventually sold, the provider gets its share of the proceeds.
While this guide compares equity release with the other options, we have a separate Equity release guide with more detail if you decide that's the right option for you. But in brief:
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Equity release is normally the most expensive option overall.
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An affordability test doesn't really apply as you don't have to make repayments.
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Equity release doesn't need repaying until the last homeowner or borrower dies or goes into long-term care (as long as any partners or co-owners are both named on the policy).
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Repayment may ultimately need to be funded through the sale of your home.
When must later life mortgages be repaid?
With retirement interest-only mortgages and equity release, you don't normally have to repay the loan until you die or move permanently into long-term care. In practice, this usually means the debt is eventually cleared through the sale of your home, allowing you to keep the mortgage for the rest of your life.
Capital repayment mortgages differ as they tend to have a maximum repayment age:
Major lenders. A capital repayment mortgage normally needs to be repaid by 75 or 80.
Smaller lenders (building societies). Here, the upper age limit of a capital repayment mortgage tends to be higher at 85, 90, 95 – sometimes there's no age limit.
Having a deadline to repay a mortgage may not fit with your life plans. If it doesn't and you'd prefer a mortgage that doesn't need repaying until you die, then capital repayment from a smaller lender, retirement interest-only or equity release could be more realistic options.
How do lenders decide what I can borrow?
Each of these mortgages works differently when it comes to whether a lender will accept you in the first place and how much it might let you borrow. Here's how it works:
Capital repayment – your affordability is key
Your 'affordability' plays a key role with a capital repayment mortgage. It'll help determine whether a lender will accept you and, if so, how much you can borrow.
This is because you'll be repaying the mortgage bit by bit each month, so you'll need to prove you can afford it – plus prove you could cope if interest rates shot up (known as 'stress testing'). If you'd struggle to prove your affordability, you may be turned down.
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Near to 70 (or your planned retirement age, if sooner)? The lender will likely lean more heavily on pension projection to work out how much you can borrow (though any other income you get, such as from property or investments, will also be considered).
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Still quite far from 70? It's more likely the lender will be happy to rely on non-pension income (such as salary, if you're still working) to work out what you can borrow.
At the very least, lenders will want to know how you're funding or planning to fund your retirement. They'll check you're doing more than just relying on the State Pension.
For these reasons, a capital repayment mortgage can be harder to be accepted for than a retirement interest-only mortgage or equity release.
Our How much can I borrow? guide explains more about how 'affordability' works.
Retirement interest-only – affordability plays a middling role
Affordability still plays a role with retirement interest-only, albeit less so than with capital repayment as you just need to prove you can afford to repay the interest each month. Again, if you're close to 70 or planned retirement age, the more lenders will focus on your pension.
Lenders typically cap how much you can borrow at between 50% and 65% loan-to-value.
And, importantly, you'll need to prove you've got a suitable repayment plan in place to eventually clear the mortgage balance. For many borrowers, this is through selling their home after their death, though it could be through something like savings or investments.
Use our mortgage calculator to see what retirement interest-only may cost you each month.
Equity release – your affordability plays a minimal role
With equity release, as there are no monthly repayments, so affordability isn't really a factor.
However, the younger you are, the less you'll be able to borrow, as there's more time for the debt to grow. Likewise, the older you are, the more you'll likely be able to borrow – see our Switch equity release guide for more on what the typical lending limits are.
Importantly, equity release lenders will want to check your property fits their lending criteria. There are some properties that aren't usually acceptable to a lender, which can include:
- Studio and basement flats
- Some local authority/housing authority flats
- Retirement properties
- Guest houses/B&Bs
- Farms
- Static/mobile homes
Boost your mortgage chances
If you're thinking of applying for a capital repayment mortgage or retirement interest-only mortgage, it's best to do what you can to improve your chances of mortgage acceptance. See our Boost your mortgage chances guide for a number of ways to do this.
Which of these mortgages is the most expensive?
There are different factors to consider here – though, generally speaking, equity release is the most expensive in the long run, and capital repayment is the cheapest.
These are the three main measures of cost:
Interest rates: capital repayment can be cheapest
Interest rates on capital repayment mortgages are generally cheaper. You can see today's top rates using our Mortgage best buys tool.
Interest rates on retirement interest-only mortgages are more expensive, typically starting from around 5% at the time of publishing.
Equity release has the most expensive interest rates of the three (lifetime mortgages specifically, as interest rates don't apply on home reversion plans). Currently rates start from around 6% – but they can be much higher.
A good place to start if you want to see today's best retirement interest-only and equity-release rates is Equity Release Supermarket.
Regular payments: equity release can cost least
Equity release costs the 'least' in terms of monthly repayments. That's because with a lifetime mortgage you don't have to make monthly repayments (though it's sensible if you do), while it's not possible to make monthly repayments with a home reversion plan.
With retirement interest-only, you only repay the interest each month (not the capital). So while there's a regular cost, it may not be much if the interest rate or mortgage is small.
The type of mortgage that requires the biggest regular repayments is capital repayment. That's because you'll be clearing both the capital borrowed and interest accruing.
Ultimately, while a mortgage that doesn't require regular repayments, or only small ones, may sound tempting, we'd suggest thinking carefully about the long-term impact of this...
Overall cost: equity release is by far the most expensive
Here's an example of how the different types of lending can work in practice:
Capital repayment mortgage. Borrow £50,000 over 15 years at 4.5%, and you'd repay about £19,000 in interest and clear the debt completely.
Retirement interest-only mortgage. Borrow the same £50,000 over 15 years at 4.5%, and you'd repay roughly £34,000 in interest but still owe the original £50,000, as your monthly payments only cover the interest.
Lifetime mortgage. Borrow £50,000 at 4.5% and make no repayments, and after 15 years the debt could have grown to almost £100,000 as interest rolls up over time.
Home reversion plan. Sell a 20% share of your home for a cash lump sum, and the provider will later receive 20% of the property's sale price – which could be far more than it originally paid you if house prices rise.
Interest rate | Monthly repayments | Overall cost | |
|---|---|---|---|
Cheapest | Capital repayment | Equity release | Capital repayment |
Middling | Retirement interest-only | Retirement interest-only | Retirement interest-only |
Most expensive | Equity release | Capital repayment | Equity release |
Will it impact what my loved ones can inherit?
A later life mortgage can affect both the people living in your home and the value of your estate after you die. The impact depends on the type of borrowing you choose and whether the debt is being repaid over time.
Will a partner or co-owner be able to stay in the home?
If you live with a partner or jointly own your home, it's important to understand what would happen if one of you dies first or moves permanently into long-term care.
With retirement interest-only and equity release, the mortgage normally only becomes repayable when the last borrower dies or leaves the property for long-term care. This means both occupants are usually protected – but only if both are named on the mortgage or plan.
If someone living in the property isn't included on the borrowing agreement, they may not automatically have the right to remain in the home once the loan needs repaying.
How could it affect what you pass on in inheritance?
A capital repayment mortgage is likely to have the smallest impact on your estate, provided the mortgage has been fully repaid before you die.
Retirement interest-only and equity release can reduce the amount you leave behind as the debt may still need to be cleared after death, often through the sale of the property.
With a retirement interest-only mortgage, you continue paying the interest each month but the original amount borrowed remains outstanding unless you make overpayments.
With equity release – particularly lifetime mortgages – the impact can be much greater because interest can continue rolling up for many years. If no repayments are made, the amount owed can grow dramatically over time.
We regularly hear from readers who've been shocked by how much had to be repaid after a parent or relative died, in some cases leaving little or nothing remaining from the property's value. At an already difficult time, dealing with the debt and sale of the home can add stress.
My father took out a lifetime mortgage policy in 2005 for the sum of £35,000 to undertake house renovations. My father is now 91 with Alzheimer's and living in a care home. We are having to sell the property to cover his care home costs. To date the outstanding lifetime mortgage balance due is £147,500.
My parents took out equity release in 2004. They borrowed £69,750 and now [in 2026] owe the grand sum of £323,562. This debt is over 4.6 times the original and feels like daylight robbery. Sadly, my parents are now both deceased.
How can I keep the cost down?
It's possible to keep costs down by opting to make repayments if they're not required, or by choosing to overpay if they are.
Doing this can clear a mortgage sooner, save £1,000s or even £10,000s in interest, and mean there's more of your estate left behind for others to inherit (if that's important to you).
This can be particularly beneficial with equity release. Unlike capital repayment and retirement interest-only, with a lifetime mortgage you don't have to make repayments, meaning what you owe can balloon – but by making repayments this risk is reduced.
Here are some examples of the impact of overpaying:
Lifetime mortgage (equity release):
You borrow £50,000 for 15 years at an interest rate of 5%.
If you don't make any repayments, after 15 years you'd owe £106,000.
But if you repay £100 every month, after 15 years you'd owe £80,000 and have saved £7,000 in interest.
Retirement interest-only mortgage
You borrow £50,000 for 15 years at an interest rate of 5%.
You repay the £208 in interest each month. After 15 years, you'd owe £50,000.
But if you overpaid by £100 each month, after 15 years you'd owe £23,260 and have saved £5,260 in interest.
Capital repayment mortgage
You borrow £50,000 for 15 years at an interest rate of 5%.
Your contractual monthly repayment is £790.
If you overpaid by an extra £100 each month, you'd clear the mortgage four years early and save more than £6,000 in interest.
Be aware you can normally only overpay a mortgage by up to 10% of the balance each year. And if you've got other more expensive debts, it may be worth clearing these first.
We've got a full explainer, plus pros and cons, in our Should I overpay my mortgage? guide.
Will I be able to downsize later?
Many later life mortgages are portable, meaning you can apply to transfer them to a new property if you move home or downsize. But approval isn't guaranteed.
Whether a lender agrees will depend on factors such as:
Whether the new property fits its lending criteria.
Whether its rules have changed since you first took out the mortgage.
Whether you still meet its affordability checks.
If the lender refuses, you may need to repay the mortgage early in order to move. This can trigger an early repayment charge, which may cost £1,000s. So if you think moving home or downsizing later is likely, check upfront if the mortgage is portable and how that would work.
See our guide to How porting works for more detail.
Equity release sometimes comes with extra flexibility
Equity release can come with extra flexibility if you think moving home in future is likely.
That's because in addition to normally being portable, lifetime mortgages often have 'downsizing protection'. This means where a lender won't let you port, you'll be able to repay the mortgage early without paying an early repayment charge – in other words, you could still move penalty-free (though you'd need a new lifetime mortgage deal, which will cost).
So if you're leaning towards a lifetime mortgage but think it's likely you'll move home before you die, it's worth considering a deal that guarantees downsizing protection.
Where to get the right guidance?
Getting mortgage guidance is always a good idea – and with equity release, it's compulsory.
Here's where to get the right advice:
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Capital repayment mortgage. Speak to a mortgage broker. Along with guidance, a broker can filter deals based on your specific circumstances, as well as apply on your behalf. For details on top, fee-free brokers, see our Cheap mortgage finding guide.
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Retirement interest-only mortgages. Brokers should be able to tell you about retirement interest-only mortgages too, though it's not always clear as not all brokers mention them on their websites. If in doubt, contact a broker and ask.
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Equity release. Here, getting advice is different. Not only is advice mandatory, but you'll need to speak to someone with an equity release qualification (which a mortgage broker may not have). See our Equity release guide for how and where to find advisers.
FAQs
How much can an equity release debt grow?
Depending on how long you live for, what the interest rate is and whether you choose to make repayments, a lifetime mortgage debt can grow to many times the size of original loan.
Imagine if you borrowed £50,000 at a rate of 6%, make no repayments and live for 25 years. By the time you die, you'd owe £223,000 – nearly five times what you initially borrowed.
Essentially, the more you borrow, the longer you live and the less you regularly repay, the more the debt will balloon in size.
What is a 'no negative equity guarantee'?
A 'no negative equity guarantee' refers to the lifetime mortgages (equity release) that guarantee your debt will never exceed the value of your home. Most lifetime mortgage deals come with this guarantee, but it's very important to double check this before applying for a particular deal.
Can a mortgage impact my entitlement to benefits?
If you receive a cash lump sum from a mortgage lender then this could impact your entitlement to benefits.
The most likely type of mortgage to impact your benefits entitlement is equity release (both lifetime mortgage and home reversion plan), though retirement interest-only and capital repayment can have the same effect too depending on how the mortgage is used (ie, if you get a lump sum).
What if I've got an expiring interest-only mortgage?
If you've got an interest-only mortgage which needs repaying soon but you're no longer sure how to do this, you could take out a new mortgage to replace it – in fact, retirement interest-only mortgages were introduced a few years ago for precisely this purpose.
Taking out a later life mortgage to replace an an interest-only mortgage may be the best option, particularly if you don't want to sell your home.
See our Interest-only mortgages guide for information on how to reduce the cost and what to do if you're not sure how you're going to repay.
Need more later life mortgage help?
Should you equity release? Pros and cons.
Switch equity release deal? It may save you cash.
Interest-only mortgages. Incl how to keep the costs down.
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