Later Life Lending

Whether you want to give some money to your children, make some home improvements, travel the world or simply enjoy your retirement without worrying about income, later life lending can provide some great options for the over 55’s to borrow money for various needs. 

No matter how many years you spend saving and preparing for retirement, when the time comes it can often be that there isn’t quite enough to keep you comfortable or allow you to do all the things you hoped to do. 

At Bower Home Finance, our knowledgeable financial experts are on hand to provide independent advice on later life lending opportunities and can help you to find the very best deal for your individual needs and circumstances. 

What is Later Life Lending? 

Later life lending refers to a range of financial products tailored for individuals in their later years, typically aged 55 and over. These options, such as equity release and retirement interest-only mortgages, are often designed to offer retirees options to boost their finances during retirement. 

At Bower Home Finance, we specialise in helping people aged 55+ explore a range of later life lending solutions. With over 18 years of experience in the sector, our team of dedicated specialists is based throughout the UK and ready to provide expert, personalised advice to help you find the option that best fits your needs. 

Later Life Lending  

Later life lending products can help you to make the most of your retirement and come in a range of mortgage products to suit your plans for the future such as; 

Retirement Interest Only Mortgages (RIO) 

Retirement interest only mortgages were designed to accommodate older borrowers over the age of 55 who could struggle to get a mainstream mortgage due to age limits. 

This type of mortgage allows homeowners to borrow against their property by only paying back the monthly interest and not the capital of the loan itself. This means that the amount owed doesn’t increase over time and because you are paying off the interest, often meaning the payments are lower than a standard mortgage. 

The terms of these loans usually mean that there is no fixed end date and as long as the monthly payments are made then you can remain in the home, but some include a fixed term that requires the loan to be repaid when you reach a certain age, so always check the terms of any proposed plans carefully. 

The remaining capital on the mortgage will have to be repaid from the proceeds of the sale of the property once you move into long term care or pass away. This means that any inheritance you plan to leave will be affected so it is important to consider your decision carefully.  

Equity Release 

Equity release allows homeowners over the age of 55 to access tax-free cash tied up in their homes without needing to move out or sell their home. There are two main types of equity release: lifetime mortgages and home reversion plans. 

Lifetime Mortgage 

This type of equity release allows you to free up some of the value in your home without needing to move and whilst still remaining the owner of the property. Available as a lump sum or in a drawdown facility, the cash you release through equity release is tax free and can be used for a range of things including clearing debts, home improvements and gifting to family.  

If you choose to gift your equity release funds to your family, there may be some tax implications, so it is important to discuss your plans with a qualified equity release adviser. 

The loan, in addition to any interest, will need to be repaid through the sale of your home when you pass away or move into long-term care. You can even choose whether or not to pay interest each month, if you choose not to then it will simply roll up and also be repaid out of the proceeds from the sale. 

This type of equity release can result in a decreased estate value, impacting any inheritance you might wish to leave, so it is important to discuss this with your equity release adviser if this is a concern.  

Home Reversion Plan 

This type of plan is less common and requires that you sell a share of your property for which you receive either a cash lump sum or as regular income. Again, the money received is tax-free and you are allowed to remain in your home rent-free whilst continuing to maintain it, with the loan secured against your property. 

There is no interest to be paid and when you move into full time care or pass away, the property will be sold and the proceeds shared according to the remaining split of ownership. This means that those who inherit the money will benefit from any increases in its value. 

Eligibility and Application 

Each later life lending option will come with its own eligibility criteria and application process. It’s important to seek out professional support and guidance when exploring your later life lending options.  

During your application, you’ll need to provide detailed information about your property’s value, your income, and your expenses. If you have an existing mortgage or other debts, these will also need to be disclosed. The adviser will help you navigate the application process, ensuring you understand the terms and conditions of the loan and how it fits into your overall financial plan. 

Benefits and Considerations 

Later life lending options can offer several compelling benefits, they enable you to release equity from your home, providing you with the funds to achieve your retirement goals, whether that’s traveling, renovating your home, or simply enjoying a more comfortable lifestyle. Additionally, these mortgages can help reduce your monthly payments compared to traditional mortgages, as you may only need to cover the interest or nothing at all. 

However, it’s crucial to consider the potential drawbacks. For instance, taking out a lifetime mortgage can affect your eligibility for means-tested benefits. If you choose not to make monthly interest payments, the debt can accumulate over time, reducing the amount of inheritance you can leave behind. Early repayment charges are another factor to be aware of, as they can apply if you decide to pay off the loan early.  

Lastly, it’s important to remember that your home may be repossessed if you fail to keep up with any contracted payments. Therefore, weighing these benefits and considerations carefully and seeking professional advice is essential to determine if a life mortgage is suitable for your individual circumstances. 

Could Later Life Lending Be Right for You? 

Borrowing in later life can provide a wide range of benefits but at the same time it can also impact any potential inheritance you plan to leave as well as affecting things such as state benefits. 

If, however, you are looking for a way to access cash that allows you to fully enjoy your retirement, without the stress or burden of worrying about money then later life lending mortgages or equity release could be the ideal financial solution. 

Eligibility criteria can vary between equity release and later life mortgage providers but in general they require that applicants are: 

• Aged over 55, or in some cases aged 60+ for Home Reversion Plans. 
• The mortgage is for a property which is your main residence. 
• The home you are living in or buying is in the UK. 
• Able to pass affordability checks for Retirement Interest Only Mortgages 
• For equity release the home you own must be worth over £70,000. 
• For RIO mortgages the minimum loan amount is £10,000 which means your property must be valued at £100,000 or more. 

Discover your later life lending options 

At Bower Home Finance, we’re here to make the process easier. Start by using our free online equity release calculator to find out how much equity you could release from your home. 

For personalised advice, speak with one of our expert advisers. We’ll explain your options clearly, including how later life lending could affect your finances, benefits, and inheritance plans, so you can make a confident, informed decision. 

Not sure which option is right for you? Contact our friendly team today, we’re here to help you find the right solution for your needs.