As the UK population ages and remains economically active into retirement, more people are looking for ways to unlock the value in their homes without losing control of their property, writes Paul Blaking
While equity release remains a popular option, many are now considering another route – mortgages tailored for older borrowers.
At Suffolk Building Society, later life lending is a huge priority for us, and we understand the diverse financial needs in later life.
Many borrowers wish to help a family member onto the property ladder, or plan home improvements. Often, they’re experiencing a change in circumstances and want to continue borrowing in retirement.
What is an older borrower?
Some lenders will view anyone whose mortgage term ends after their retirement age as an ‘older borrower’. Lenders each have their own guidance. To give you an idea, we class retirement age as 70 for manual jobs. For jobs which are non-manual, or self-employed manual, it’s 75.
So, if your mortgage term is 35 years you may find yourself in the ‘later life lending’ category while you’re still paying off a student loan.
Why look beyond equity release?
Equity release, which includes lifetime mortgages, allows homeowners over 55 to tap into the value of their home without monthly repayments. Interest is added and grows over time, eventually being deducted from the property’s sale value.
This will potentially reduce any inheritance left. There may also be early repayment charges and implications for means-tested benefits.
What are the alternatives?
Older borrowers might be able to choose from traditional capital and interest repayment mortgages, interest-only mortgages, or Retirement Interest-Only (RIO) mortgages.
Unlike equity release, regular payments are made throughout the mortgage term, or, in the case of RIOs, until the borrower passes away or moves into long-term care.
- Standard repayment mortgages – Similar to traditional mortgages, where the loan is repaid monthly. Some lenders (like us) have no maximum age and offer terms up to 40 years.
- Standard interest-only mortgages – Require monthly interest payments, with the capital repaid at the end of the term, often through the sale of the property.
- Retirement Interest-Only (RIO) mortgages – Aimed specifically at older borrowers, like interest-only mortgages these require monthly interest payments. However, the capital only becomes due when the last remaining borrower dies or moves into long-term care.
The right product for you will depend on your income or investments, property value, financial goals, and long-term plans.
What are the benefits of these three alternatives?
- Control over interest costs
Unlike equity release (where interest is added and grows over time), later life mortgages usually require regular payments. Total borrowing is therefore easier to understand and manage.
- Full property ownership
With a standard mortgage, you retain full ownership of your home, preserving your independence and maintaining the potential to leave an inheritance.
- Greater flexibility
Most mortgages for older borrowers come with options to move home, overpay, switch to interest-only payments, or remortgage if needed.
- Broader lending criteria
Lenders are increasingly considering pension pots, investment income, and even part-time work when assessing affordability, which opens options to more applicants.
- Suitable for a range of goals
Later life mortgages aren’t a last resort; they can help with a range of goals, such as assisting family with house deposits, making home improvements, or improving your retirement lifestyle.
Considerations
While there are many advantages, it’s important to consider the following:
- Affordability checks – Lenders will assess your ability to manage repayments throughout retirement.
- Interest-only products – any repayment strategy (such as sale-and-downsize) must be realistic and clearly evidenced.
- Impact on benefits – Releasing a lump sum could affect eligibility for means-tested benefits, so it’s essential to check.
- Loan-to-value – LTV limits may be lower, especially as you age.
- Inheritance planning – Mortgages can reduce the value of your estate, though they typically preserve more than equity release.
Independent advice is key
Taking on a mortgage at any stage is a significant financial decision. We recommend seeking independent advice, especially from experts in later life planning, before proceeding with a mortgage. The following organisations offer impartial guidance:
Equity Release Council – 0300 012 0239
Citizens Advice – 0345 404 0506
HM Revenue & Customs – 0300 200 3300
Final thoughts
Mortgages for older borrowers have evolved into a mainstream option for those looking to unlock their home’s value without giving up control. If you’re currently (or will be) an older borrower, and are exploring your options, don’t assume equity release is your only choice. A later life mortgage could offer you the flexibility, freedom, and peace of mind you’re seeking.
Paul Blaking is manager, direct mortgages at Suffolk Building Society
He looks after the small, friendly team of mortgage advisors at Suffolk Building Society.
The Society, which was founded in 1849, specialises in later life lending, as well as self build, expat and holiday let mortgages.
