Mortgages in Retirement
Mortgages in Retirement: What’s Changing and Why It Matters
If you’re already retired—or planning to be soon—and still have a mortgage, you’re not alone. In fact, one in five retirees in the UK is still paying off their home loan, with an average balance of around £63,000. That’s a hefty chunk of change, especially when you’re supposed to be enjoying your golden years.
But here’s the good news: retirement mortgages are already very flexible and the rules around retirement mortgages might be getting a refresh to boot.
What’s Happening?
Just this week, the Financial Conduct Authority (FCA) launched a public consultation to rethink how mortgage lending works—especially for older borrowers. They’re asking the big questions: Are the current rules too rigid? Could lenders offer more flexible options for people who’ve already retired?
Spoiler alert: the answer might be yes.
What Could Change?
The FCA is exploring ways to make mortgages more retirement-friendly. That could mean:
- Loosening affordability checks so that pension income (like annuities or drawdowns) is better accounted for.
- Encouraging new types of mortgage products—think interest-only options, hybrid deals, or even downsizing-friendly loans.
- Giving lenders more freedom to tailor products for retirees, while still keeping consumer protections in place.
Why It Matters
For many retirees, the current mortgage market feels like a dead end. Equity release is often the only option, and that’s not always ideal. These proposed changes could open the door to:
- Easier remortgaging later in life
- More choice beyond equity release
- Better ways to manage housing costs without draining your pension
Abundance of options
Remember, if you are retired or anticipate needing a mortgage that will run past your retirement date, there are more options than there has ever been. These include interest only or repayment on a term of up to 40 years, regardless of your age, retirement interest only mortgages and lifetime mortgages.
Generous income multiples
Some lenders are becoming even more flexible on income multiples for retired borrowers, often because as a demographic they tend to have lower outgoings. Where you fit this mould, some lenders such as Hodge and Perenna lending up to 6 times income. Whereas, Livemore can often lend up to 7 times income and theoretically have no income multiple cap at all.
What’s Next?
The FCA has invited feedback from lenders, advisers, and everyday folks like you. This process concluded last month, and we now await the results. If all goes well, we could see new retirement-friendly mortgage options hitting the market in 2026.
Whether you’re retired, semi-retired, or just planning ahead, this is a space to watch. Want help figuring out what this means for your own mortgage situation? Drop us a message—we’re here to help you navigate it all with clarity and confidence.
Need help?
Please see here for further information on how the different retirement mortgages work and how they might suit you.
Alternatively, you can call us today on 01174420604 or book an appointment with one of our advisers for tailored advice
