Later Life Lending: A Helpful Guide for Borrowers Over 55
As retirement approaches, or even once you have retired, many homeowners over the age of 55 begin to ask the question: can I borrow without needing to downsize? This is where later life lending comes in. Whether you're paying off an existing mortgage, improving your home, or looking to boost your pension income, later life lending could be a helpful solution.
What Is a Later Life Mortgage?
Later life mortgages are designed specifically for people aged 55 and over. They allow you to borrow against the value of your home while continuing to live in it. There are a few different options available, including:
- Lifetime mortgages: This is a form of equity release. You borrow a lump sum or drawdown facility secured against your home, and the interest is usually rolled up and repaid when the property is sold, you move into long-term care, or you pass away.
- Retirement interest only mortgages (RIOs): With this option, you only pay the interest each month. The loan itself is usually repaid when the borrower dies or moves into permanent care.
Both types offer different benefits, and the right choice depends on your individual circumstances.
Why Might Someone Choose Later Life Lending?
Later life lending can help with a range of financial goals:
- Repaying an existing mortgage: Some homeowners reach retirement with an outstanding mortgage. A later life mortgage can provide a way to continue repayments without needing to move.
- Releasing equity: You might want to access some of the money tied up in your home to fund home improvements, support your retirement lifestyle, or help family members with a deposit.
- Estate or inheritance planning: Some people choose to release equity early in order to gift money to children or grandchildren, or to plan ahead with inheritance tax in mind.
How Does the Process Work?
If you’re considering a later life mortgage, here’s a brief overview of what to expect:
- Initial conversation: A specialist adviser will talk through your needs and help you explore available options.
- Affordability assessment: Lenders will consider your pension income, savings, or other income sources to determine what you can afford.
- Product selection: You’ll choose between a lifetime mortgage, a retirement interest only mortgage, or a more tailored option based on your goals.
- Advice and legal support: Receiving regulated advice is essential, especially if you are releasing equity, as this can affect your estate and any means-tested benefits.
- Completion: Once everything is agreed, funds are released and repayments begin, if applicable.
Things to Consider
While later life lending can be a useful tool, there are some important points to be aware of:
- Interest roll-up: With a lifetime mortgage, the interest can accumulate over time. This may reduce the amount left to your beneficiaries unless you make repayments.
- Changes in circumstances: Some products have early repayment charges if you settle the loan early. It is important to consider your future plans carefully.
- Impact on inheritance: Any type of later life lending may reduce the value of your estate and could also affect eligibility for certain benefits.
Real-Life Example
In a case reported by The Times in early 2025, a retired couple in their 60s reached the end of their interest-only mortgage term. Rather than selling their home, they opted for a retirement interest only mortgage that allowed them to stay put while making manageable monthly interest payments. This solution not only offered them stability, but also enabled their adult children to return home temporarily.
Source: The Times – "We got a mortgage in retirement so our boomerang kids could come home"
Is It Right for You?
If you're a homeowner aged 55 or over and need access to extra funds, later life lending could be worth exploring. It’s especially useful if:
- You want to stay in your home and avoid downsizing
- You need to repay an existing mortgage
- You would like to release equity to help family or supplement your retirement income
- You are comfortable with the long-term impact on your estate
As with any mortgage, it's important to get expert advice to find the right solution for your needs.
Final Thoughts
Later life lending, including lifetime mortgages, retirement interest only mortgages, and equity release, offers greater flexibility for people approaching or already in retirement. With the right advice and a clear understanding of the long-term implications, it can help you make the most of your home in later life.
Just Mortgages is a trading name of Just Mortgages Direct Ltd, which is an appointed representative of The Openwork Partnership, a trading style of Openwork Limited which is authorised and regulated by the Financial Conduct Authority.
Approved by The Openwork Partnership on 13/08/2025.
HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen.