Borrowing in retirement
Lenders look at your retirement income, such as pensions, to decide whether you can afford the repayments. Options include standard mortgages that run past retirement, and retirement interest-only mortgages, where you pay just the interest and the loan is usually repaid when the home is sold, for example after you die or move into long-term care.
Equity release, where interest usually rolls up instead of being paid monthly, works differently and isn't shown by this calculator.
Worked example
Borrowing £100,000 at 6% over 15 years costs £843.86 a month on a repayment basis, or £500.00 a month interest-only, with the £100,000 still owed at the end.
Interest is worked out monthly at one twelfth of the annual rate. Lenders may calculate interest differently (some charge it daily), so your actual payments can differ slightly.
Things to think about
Make sure payments stay affordable if your income falls, for example if a partner dies. Independent advice is a good idea for later-life borrowing.
Inputs for the retirement loan calculator
Amount to borrow
The amount you want to borrow.
Interest rate (per year)
The annual interest rate on your loan. The rate shown is only an example, so enter the rate from your quote.
Term
How many years you'll repay over.
Repayment type
Interest only covers just the interest, so the full loan is still owed at the end. Repayment clears it over the term.
CALCULATOR QUESTIONS
Retirement loan calculator questions
Can I get a mortgage in retirement?
Yes, if lenders are satisfied you can afford it from your retirement income.
What is a retirement interest-only mortgage?
A mortgage where you pay only the interest. The loan is usually repaid when the home is sold, such as after death or a move into long-term care.
Is this the same as equity release?
No. With equity release, interest usually rolls up and nothing is paid monthly. This calculator shows monthly payments.
Should I get advice?
It's sensible to get independent financial advice before borrowing in later life.