When it comes to retirement, some people may choose to downsize on their property and move into somewhere more comfortable for the rest of their lives.
When in retirement, there are several options when it comes to buying a home. However, when looking at purchasing a home and getting a mortgage in retirement, it can be challenging as most lenders will have an age restriction and require a high paid, regular income to buy a house.
What Are The Different Finance Options For Buying A Home When In Retirement?
There are a various financial option for buying a home in retirement and finding, which is the best one for you.
There are different types of mortgages and financial help that can be used when purchasing a home, but this may be harder to do in retirement.
Most lenders will want a standard and high amount of income to pay the mortgage off, so this is where you may struggle. Below are some of the different options for buying a house when in retirement:
Leasehold-Leasehold properties are where you have temporary ownership of a property for a contracted amount of years with the landlord. When looking into retirement properties, you must consider whether you want the place to be freehold or leasehold.
You may find in places like retirement villages that they are leasehold properties, but this can affect you getting a mortgage.
A leasehold is suitable for those in retirement as you can agree with the landlord how many years you would like to have ownership and live in the property.
However, if this is something you’re thinking about, talk to a broker who has experience in leaseholds for retirement and get their advice and opinion on it first as it can be hard to get a mortgage on them.
- Standard mortgage-
A standard mortgage is where a bank or building society lends money to purchase a property, which is paid back.
Some lenders have an age limit for giving out mortgages, so it might be a struggle to find a bank or build society that will lend you the money. If you can find a lender that will give you a mortgage for a property, this is a great option to go down if you can afford to pay the mortgage.
It is just like any other mortgage, but the difficulty is finding somewhere who can provide a mortgage for you in retirement.
- Retirement mortgage-
This type of mortgage is aimed at those in retirement and looking to purchase a house. They are different from standard mortgages as they don’t have a fixed loan term, and instead, they are repaid when you move or pass away.
This is an excellent option for those in retirement as it is targeted directly to help you, and you do not need to have the money available to pay off straight away.
As long as the money is available when it comes to moving away or passing away, this mortgage is available to you. You would need to find a bank or lender who offers this type of mortgage to know precisely what you’ll need to qualify for it.
- Bridging finance-
Bridging finance or bridging loans is a short-term loan that is usually paid back within 12 months.
When going to a lender, they will discuss what you require the money for and what assets you have to use as security and agree on an amount that you can borrow from them.
This is great as you can then buy the property you are wanting and don’t need to rush the sale of your current home. Using this, you can guarantee that you can buy the property you wish to and then wait for your existing property to be sold.
The money from the property sold can then be used to pay back the loan in a short amount of time agreed with the lender.
It is good for those in retirement as you can borrow the money, buy your house, sell the old one, pay back the loan, and then be left with very little to no mortgage on the home.
This way, you don’t have to worry about money as much, as long as you have your strategic plan in place.
What Is The Best Option For Buying A House In Retirement?
Deciding what the best option is when it comes to buying a house in retirement depends on your current situation, finding the right bank or lender, and seeing what they can offer.
Mortgages and leasehold options may be harder to get when in retirement and may not be the best option due to not having a guaranteed and considerable income.
With mortgages, you would need to prove to the bank or building society that you have a regular income that can help pay the mortgage off. Due to this reason and being in retirement, mortgages, and leasehold properties, aren’t as easy to get and may not be the best option.
On the other hand, retirement mortgages and bridging loans are outstanding for those wanting to buy a house in retirement. Retirement mortgages are aimed at those in retirement.
However, you may worry that the mortgage would need paying off at some point, and you may not be able to guarantee this.
Bridging loans are a great option to buy property while waiting for your current one to sell and then use the money from the sale to pay off the house and the short-term loan. With it being short-term, you don’t worry that it needs paying off as it will be paid back within a year.
Advantages Of Bridging Loans For Retirement
Some key features with a bridging loan for those in retirement that you may not get with other loans and mortgages include:
- Rates from as little as 0.48% per month
- No maximum loan size
- Some lenders will offer a no exit or broker fee for pensioners
- One-month minimum loan term
If you are looking at buying a house in retirement, look into all the options to find the right one for you and your current situation.
If you want some financial help to buy a house quickly and have paid most of it off straight away, then a bridging loan is the best option for this.
For more information on financing a home for retirement contact Property Finance Partners on 0203 393 9277 or email: [email protected]