If you’re thinking about getting a mortgage at any age, there’s a lot you need to think about before you take the plunge. It’s always best to seek out professional, no-obligation advice before taking out a mortgage, whether it’s your first home or your last.
But why would you want to consider a mortgage in later life? After all, if you’ve fully paid off your home and are living mortgage-free, taking out a loan on your home might sound pretty counter-intuitive, especially if you still have a good income. In fact, for many people there’s loads of reasons why you might want to do it – including holidays, home improvements or relocating – and everything in between.
At Ipswich Building Society we offer a range of later life mortgages, including the Retirement Interest Only (or ‘RIO’) mortgage. This is a type of interest-only mortgage that can be used to raise funds from your home without selling it – the loan is then repaid from the sale of the property either when the borrower dies or moves into long-term care.
To make things a little easier we’ve identified four main groups of borrowers who might be best suited to a later life or RIO mortgage - you should also check out our flowchart which may help you identify which type of later life borrower you are.
Helping family onto the property ladder
Stories of young couples and families struggling to get on the housing ladder are well reported in the news – with falling home ownership rates, stagnant wages and rising living costs, it’s no wonder thousands are struggling to own their own home. As a consequence, the so-called Bank of Mum and Dad hands out around £6.5bn of gifts and loans to family members each year to children and grandchildren. A later life mortgage could enable you to release some equity in your home to help those little darlings to get a foothold on the property ladder.
Unwind with a large leisure purchase
Do you have your eye on that static caravan or motorhome you've always wanted? If you’ve retired after a lifetime of work and are looking to spend several weeks or months enjoying some time away, it’s worth considering whether a later life mortgage could unlock more options for you.
Searching for your perfect retirement home
When it comes to retirement, there’s a good chance you’ll be thinking about selling the family home and downsizing into something smaller (but not necessarily cheaper!) to reduce your monthly bills – whether that be a brand new apartment closer to people you care about or a quaint little cottage by the sea.
Making changes to your home or garden
If you’re content in your home for the time being but want to make some changes to better equip you for later life, you could consider releasing funds to enable you finance much needed changes to your current home. Maybe you’ve been hankering after that dream kitchen or wanting to landscape the garden in time for family BBQ season – or considering more practical alterations such as adding a downstairs bathroom or bedroom. Whatever you have in mind, we’ll do our best to understand your needs and see where we can help.
At Ipswich Building Society we’re proud to have supported older and retired borrowers for many years following the Mortgage Market Review in 2014, which saw the tightening affordability rules for older applicants. If you are considering a later life or RIO mortgage, or just looking at your options, speak to one of our friendly Mortgage Consultants for free, expert advice on your situation.
More resources on later life mortgages can be found here.