How does Rest Less make money
We make money through advertising and commission from affiliate links, which enable us to offer Rest Less as a free service to our users. The content on this page may use affiliate links, which track traffic from our website to a third party provider and enable us to receive a commission or payment from any traffic we refer.
* Affiliate links on this page have an * next to them. We place enormous importance on our editorial independence and the integrity of our content which means that we will never change how we write about something as a result of an affiliate link.
Borrowers in their 50s, 60s and beyond could find it easier to access a mortgage under proposed rule changes announced by the Financial Conduct Authority (FCA).
The reforms aim to improve access to lending for groups often overlooked by mainstream lenders, and could benefit older homeowners looking to move, remortgage or borrow against their property in later life.
Julian Sampson, Partner and Head of Lending Department at TWM Solicitors, said: “The ageing population is creating an immovable lock up of equity as they are unable or unwilling to downsize without viable mortgage products to support them in doing so.”
“If they were more easily able to downsize, they could release housing stock into the market and cash into the economy. The retirement interest-only mortgage has not been as popular as one might think, so any means of loosening the terms of this product must be welcomed.”
Advertisement
Want to speak to a mortgage adviser? Speaking to an experienced adviser can help you to understand your options and get a great deal on your mortgage.
If you’re looking for expert mortgage advice, you can get a free consultation with a mortgage adviser at HUB Financial Solutions. Speak with a qualified, FCA-regulated adviser you can trust. HUB Financial Solutions is rated ‘Excellent’ on Trustpilot. Please note your home may be repossessed if you don’t keep up with mortgage repayments.
What are the proposed changes?
The FCA’s proposed mortgage rule changes aim to give lenders more flexibility to consider individual circumstances when deciding whether or not to offer them a mortgage, as well as to develop new mortgage products that can meet a wider range of needs. They include:
- Making it easier for older homeowners to access housing wealth through retirement interest-only mortgages.
- Giving lenders greater flexibility when offering interest-only mortgages, while ensuring borrowers have a suitable repayment strategy.
- Reducing barriers to lending for people with variable incomes, such as the self-employed, and those paid in foreign currencies.
- Encouraging lenders to assess borrowers based on their current financial circumstances, rather than automatically ruling them out due to minor or historic credit issues.
David Geale, executive director for payments and digital finance at the FCA, said: “We’re living longer and how many people work has changed. Our mortgage rules need to keep pace so those who can afford to repay can borrow. Stronger protections mean we can now safely widen access to mortgage borrowing for those that may be underserved.”
The proposed changes will now be consulted on until July 28, 2026.
What are the current mortgage options for borrowers over 50?
Several lenders are willing to lend into retirement, as long as your mortgage is repaid by your 75th birthday, and provided you can prove you have a stable income from their pensions, investments, or other sources.
If you’re considering a mortgage later in life, an affordability calculator can provide a useful starting point. We have a mortgage affordability calculator, which will give you a rough estimate of what you might be able to afford, based on current market conditions.
Once you have a rough estimate, it can be helpful to compare different mortgage deals to understand what your monthly repayments are likely to be. A mortgage broker can do this for you to ensure you find the best possible deal.
If you’re aged 55 or over and want to buy a home, remortgage or borrow in later life, a standard mortgage isn’t your only option. Two products designed specifically for older borrowers are retirement interest-only (RIO) mortgages and lifetime mortgages.
Retirement interest-only mortgages
Retirement interest-only (RIO) mortgages are aimed at older homeowners who may struggle to qualify for a conventional mortgage in retirement. They can be particularly useful if you currently have an interest-only mortgage and are concerned about how you’ll repay the outstanding capital when the term ends.
With an RIO mortgage, you make monthly interest payments for the rest of your life, rather than repaying the loan by a fixed date. The capital is typically repaid when your home is sold after you die or move into long-term care.
Because you’re only paying the interest each month, repayments are usually lower than on a repayment mortgage, which can make affordability assessments easier to pass. However, it’s important to remember that failing to keep up with repayments could still result in your home being repossessed.
It’s worth bearing in mind that the loan will need to be repaid from the proceeds of your property sale, reducing the amount you may be able to leave to your beneficiaries. For this reason, it’s worth discussing your plans with family members before proceeding.
RIO mortgages are offered by a growing number of lenders, including building societies, and are generally aimed at borrowers in their 50s, 60s and beyond. You can find out more in our guide How retirement interest-only mortgages work.
Lifetime mortgages
A lifetime mortgage is a type of equity release plan which allows you to borrow against the value of your home while continuing to live there.
Unlike a standard mortgage or RIO mortgage, there are usually no monthly repayments to make, although you can choose to make them if you want to. Instead, the interest rolls up over time and is repaid, along with the original loan, when you die or move into long-term care, and your property is sold.
Before taking out a lifetime mortgage, you must receive advice from a qualified adviser. If you choose a plan from a member of the Equity Release Council, you’ll benefit from safeguards including the right to remain in your home for life and a guarantee that you’ll never owe more than your property’s value.
Advertisement
Are you considering releasing equity from your home? Speaking to an experienced adviser can help you to understand your options.
If you think you’d benefit from expert advice, you can book a free consultation with an adviser at HUB Financial Solutions. A qualified, FCA-regulated equity release adviser you can trust will listen to your needs and talk you through your options. HUB Financial Solutions is rated ‘Excellent’ on Trustpilot.
Please note that equity release will reduce the value of your estate. So if it’s not right for you, the adviser will help you understand some alternatives.
Lifetime mortgages can provide valuable financial flexibility in later life, but they aren’t suitable for everyone. Because interest compounds over time, the amount owed can grow significantly, reducing the value of your estate and any inheritance you leave behind.
It’s also worth bearing in mind that releasing a lump sum from your home could affect your entitlement to means-tested benefits. Learn more in our article Lifetime mortgages explained.
Rest Less Money is on Instagram. Check out our account and give us a follow @rest_less_uk_money for all the latest Money News, updated daily.
Join the discussion
Read our full commenting terms and guidelines