There is a popular misconception that it is not possible to get a mortgage in retirement. With interest-only mortgages, it is possible for pensioners to obtain a mortgage. So what exactly is an interest-only mortgage? An interest-only mortgage is one that does not increase the balance of the mortgage. They result in small monthly payments of the interest only. Lifetime interest-only mortgages are available to pensioners. This provides them with a mortgage that has no maximum duration and interest-only monthly payments for the rest of their lives. Since that there are no capital payment, when the individual dies, the capital amount of the mortgage will have to be paid back in full either by selling the property or by the children of the deceased.
In considering a lifetime mortgage in retirement ,borrowing will be highly based on the ability to make the monthly payments. In order to determine if pensioners are eligible for a lifetime interest-only loan, the firm looks at the different sources of income of the pensioner. The most common source of income that is taken into consideration is the pensionable income. However, the pensionable income might not always be sufficient for the monthly interest-only payments. In such cases, the firm will look at savings or other sources of income.
The value of the property will determine the amount that can be applied for which is normally a percentage of the value of the property. A lifetime interest-only mortgage is offered to individuals who are over fifty-five years and no older than eighty –five year. Most individuals receive a loan duration of approximately fifteen to twenty year. The older you get the shorter the duration of the lifetime interet-only mortgage will become.
So if you are reaching retirement, you might want to start considering your mortgage options. Your main aim is to remain comfortable so you need to make the best financial choices to ensure your security during your senior years. It is therefore advisable to explore and investigate all the options available to you as are pensioner. It is advisable to consult your bank or a mortgage advise for professional advice before applying for a lifetime interest-only mortgage. You need to choose the right plan that will best suit your retirement life plan.
So the lifelong question has been answered. Yes, it is possible to obtain a lifelong interest-only mortgage in retirement.