A retirement mortgage can be a godsend to people who are finding it hard to pay an interest only mortgage that’s coming to an end or want to help their family by finding money for a deposit on their first house. But, what is a retirement mortgage exactly?
A retirement mortgage is a mortgage which doesn’t have to be repaid until you die, sell the house or go into full time care. The amount you borrow against the house means you can release capital stored in your house without worrying about where you’re going to live. You only have to pay the interest on the loan and after the youngest borrower turns 80 or you’ve had the home for 5 years you have the option to stop paying this as well.
The catch with retirement mortgages
We should note that whilst these loans are a little different to a regular mortgage, you do still have to make your monthly payments on time or your house will be at risk of repossession. At least for the 1st 5 years or until you turn 80. There technically isn’t a minimum age for these loans, but they are usually aimed at people who are over 60. The catch is the house will most likely be sold when you pass away and the amount you can borrow is usually 40-60% of your property value.
What are the advantages of a retirement mortgage?
- The payments tend to be much lower than normal mortgages
- It gives you the change to save money
- Paying the interest can stop it building up like on an equity release
- You can avoid downsizing
- There isn’t a fixed term loan making it more flexible
- Often will offer free overpayments
- You can pay off other outstanding debt