Q I’m 65 and single and still work part time earning £23,000 a year (£1,560 monthly) on top of my private pension of £550 and state pension of £700 (both monthly). My interest-only mortgage will come to an end in November 2019 and I will still owe £112,000. The house is worth £190,000 and I want to stay in it. What are my options? PH
A Until relatively recently, because of your age, if you didn’t have the money needed to pay off your interest-only mortgage at the end of its term, your choice would have been between selling up and downsizing or taking out an equity release plan to raise the cash needed to pay off the mortgage. Those options are still available to you, but as a result of the relaxation of the rules about the sale of interest-only mortgages by the Financial Conduct Authority (FCA), there has been a growing number of specialist “later life” lenders offering both interest-only and repayment mortgages to older borrowers excluded by mainstream lenders because of their age. So if your current lender won’t let you extend your mortgage, there is likely to be a specialist lender who will let you take out a conventional residential mortgage provided you meet its affordability requirements.
For example, the Family building society offers mortgages to the over-65s with a maximum term (at 65) of 20 years on an interest-only basis but 30 years with a repayment mortgage. With the mortgages from Aldermore that are aimed at borrowers aged 55 to 85 (at the time of application), repayments can be extended up to the age of 99. In both cases, the most you can borrow is 60% of the value of your home if you go for interest-only but 75% with a repayment mortgage. With the Retirement Interest Only (RIO) 55+ from Hodge Lifetime – which is available only through financial advisers – there is no fixed end to the mortgage term, which means that the mortgage doesn’t have to be paid off until the property is sold – either on your death or because you move into long-term care. ends