Mortgages for Over 60s

elderly couple discussing mortgages

If you are wondering what mortgage options you have over the age of 60, it can be difficult to know which products are suitable for you. You may need a traditional mortgage and have already been declined, or you may be concerned about whether a lender factors in medical conditions to their decision.

The good news is your medical history is not a factor with a mortgage lender. However, they will be aware of your age and the average life expectancy in the UK. There are also mortgage products available with more flexible lending criteria compared to a traditional mortgage for older borrowers.

Let’s explore mortgages for those over the age of 60.

Can I Get a Mortgage if I am Over 60 years old?

Yes, there are several mortgage products available to you over the age of 60, including products that are not available to young borrowers.

When deciding on the right mortgage product for you, it is important to consider what you are intending to achieve.

For example, Equity Release is a lifetime mortgage product available to those over the age of 55 and is designed to free up cash that would otherwise be tied up in your property. If you are looking to buy a new house or do not have much equity in the property you own currently, Equity Release would be unsuitable. With Equity Release Lifetime Mortgages, the maximum mortgage sum available is typically 50% loan-to-value.

Why is it Harder to Get a Mortgage When You Are Older?

Lenders calculate all risks involved when lending to borrowers. There are two main factors that make lending to older people riskier for banks and building societies.

Age and Life Expectancy

First, it is an unfortunate fact that as we get older, we are closer to passing away which means lenders will be aware of general life expectancies.

In the UK, the average life expectancy for a female is 82.9 years and for a male is 79 years. If you took a mortgage at the age of 60, with life expectancy factored in, you are already below the traditional mortgage term of 25 years.

This means lenders will set an age limit when applying for a traditional mortgage product to mitigate the risk of you passing away during the mortgage term.

Income in Later Life

Secondly, income is also a factor. Currently there is a trend across the country for people to retire younger. Notwithstanding this new development, the retirement age in the UK is still short of 70 years old.

Unless you have an extremely generous pension pot, the chances are you will be anticipating a drop in income when you retire. Most retirees in the UK see their income more than halved compared to their salary.

This is unsurprising considering the average pension pot according to the Office for National Statistics is £107,300 – which must be spread across your remaining years. Unfortunately, this sobering statistic is made worse by the fact that 1 in 5 retirees have no private pension whatsoever.

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Mortgage Types for Over 60s

As discussed, there are various mortgage products available to those over 60.

Traditional Mortgage

Despite your age and potential loss of income, you may still qualify for a traditional mortgage product. This is especially useful if you want to sell your property and buy a slightly more expensive retirement property. It is common for older people to take out a small mortgage over a short timeframe if they are eligible for a traditional mortgage product.

It is also common for older borrowers to remortgage later in life, particularly to free up money to fit mobility aids and install wet rooms in a property.

Equity Release Mortgage

Because the pension situation on average is dismal for older people, there may come a time where money is needed to fund your lifestyle. Equity Release allows older borrowers to take money out of the property they already own with a specialised mortgage product.

You do not need to use the money from Equity Release for meeting basic living costs and choose however you want to spend the funds. Some borrowers simply want to take the holiday of a lifetime or purchase their dream car.

Retirement Interest-Only Mortgage

Traditional mortgages can be hard to obtain later in life for reasons already outlined in this article.

Retirement Interest-Only Mortgages are a relatively new mortgage product aimed at helping those who are unable to get a traditional mortgage – normally due to affordability calculations.

They work by allowing you to borrow money and only pay the interest portion of the mortgage off each month rather than both the capital and interest you would owe on a traditional mortgage product.

How to Improve Your Chances of Getting a Mortgage Over 60?

Aside from your age and income, a traditional mortgage product has all the same requirements you would encounter if you were borrowing at a younger age.

This means your desired or existing property should be in good condition and mortgageable. You should have a sufficient credit score to pass the credit checks and you will need the required deposit amount.

The key aspect of a traditional mortgage later in life is the affordability calculation. Lenders will want to ensure you are able to afford the mortgage payment comfortably each month. Given the reduced mortgage terms when borrowing later in life, you will find your mortgage payments may be much higher than anticipated.

For example, borrowing £100,000 over 7 years is going to be considerably more expensive each month compared to a 20-year-old borrowing the same amount over 35 years.

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Can I Use Pension Income to Get a Mortgage?

Some lenders will take your pension income into account for affordability, allowing you to set your mortgage term beyond your retirement age.

Not all lenders allow pension income. This is because some lenders view pension income as an unreliable source of income. When you consider you can draw down a lumpsum of your pension tax-free with new pension rules, a lender may be reluctant to include your whole pension pot as potential regular income.

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Borrowing at an older age is possible and there are products such as Equity Release and Retirement Interest-Only Mortgages that are tailormade for older borrowers.

Understanding which product meets your needs can be tricky though and it is best to consult a mortgage broker.

Boon Brokers is a Whole of Market Mortgage, Insurance and Equity Release Broker. Boon Brokers provides fee free mortgage advice.

Contact Boon Brokers to book your over 60s mortgage consultation today.

Gerard BoonB.A. (Hons), CeMAP, CeRER

Gerard is a co-founder and partner of Boon Brokers. Having studied many areas of financial services at the University of Leeds, and following completion of his CeMAP and CeRER qualifications, Gerard has acquired a vast knowledge of the mortgage, insurance and equity release industry.