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Retirement plans often involve becoming mortgage free before leaving the workforce, but for many people paying this off is an endeavour which will take a longer amount of time. For others, purchasing a property in later life could be a retirement goal worth pursuing. As such, many Britons will be confronting a mortgage as an older borrower.
It is often considered as difficult to secure a mortgage when a person reaches retirement for a number of reasons.
However, one of the most important to mortgage lenders is the ability for a person, or couple, to repay the loan.
If a person is retired, they often do not have a regular stream of income through a salary anymore, and as such the risk of lending is likely to increase.
However, this does not exclude people from being able to get a mortgage entirely.
Express.co.uk spoke to Kevin Roberts, director of Legal and General Mortgage Club, to discuss purchasing a new home or securing a mortgage in retirement.
He provided insight into the market at present and steps people may wish to take.
Mr Roberts said: “Later-life lending is actually forecast to increase in the future.
“Houses are getting more and more expensive, and people are taking out longer terms on their mortgage.
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“Perhaps these people could be taking an interest only deal or sorting out a part and part arrangement.
“Regardless, what is important to understand is that dealing with a mortgage in later years is becoming much more common, and there are some things to bear in mind with this.”
While there may be some level of difficulty in securing a mortgage in later life, it is not an option which is off the table.
There are a number of lenders who offer such arrangements to older Britons, but it is of course important to shop around.
This is a point which Mr Roberts also stressed, urging Britons to consider their steps carefully.
He said: “A mortgage in later years isn’t a dangerous position if you are going into it with your eyes open.
“But the important issue is to take advice on the matter as you go forward. This ensures you have all of the relevant information at hand to help you best.”
However, Mr Roberts also acknowledged that many people entering their retirement are likely to be in different positions when it comes to their mortgage.
He concluded by exploring these differences, and the best steps for older people to take.
He said: “With later-life lending, we often see a particular imbalance.
“You have people with huge property wealth, especially in the south east of the country, but not necessarily a great pension income, and this kind of property wealth may not be as prevalent elsewhere.
“So it probably might be a good idea for people to live comfortably by utilising their housing wealth when they reach older age.
“I do think we are going to see that become far more prevalent as the years go on.”
As Mr Roberts states, using property wealth could be a suitable idea to help with income.
This can be achieved through equity release, which helps Britons to withdraw property value to use for other goals.
However, before taking any steps on a mortgage, particularly in later life, it is vital to consult a mortgage advisor.
These specialists can often provide important insight and guidance which suits a person’s individual circumstances.
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