Remortgaging Options for Retirees

Navigating through the various financial options available for home improvements can be a daunting task, especially for retirees who might be out of the loop on current financial products. A WhatMortgage reader, a 68-year-old retiree, reached out for advice on possible remortgaging options to fund an extension and refurbishments for their £340,000 home. Their finance expert, Mark Gregory, sheds light on this topic, offering insight into options like equity release and lifetime mortgages that could turn this reader’s renovation dreams into reality.

Can Retirees Remortgage?

Mark answered – Absolutely! Retirees, especially those who have fully paid off their previous mortgage, have a variety of options when it comes to funding home improvements through remortgaging. Even at 68 and living alone, you’re not barred from remortgaging your home. Given your property’s value and the fact that you’ve been mortgage-free for seven years, several avenues are available for you to explore.

Exploring Equity Release and More

Equity release, specifically, can be a fantastic option for homeowners like you. It allows you to access the money tied up in your home without having to move. Here’s a brief look at some products in the equity release realm that might suit your needs:

  1. Flexible Lifetime Mortgage: This plan allows you to borrow a portion of your home’s value at a fixed interest rate. You retain ownership, and the loan amount plus any accrued interest is repaid when you die or move into long-term care.
  2. Home Reversion Plan: Here, you sell part or all of your home to a reversion company in exchange for a lump sum or regular payments. You can continue living there rent-free until you die, but you must maintain and insure it. At the end of the plan, your property is sold, and the sale proceeds are shared according to the remaining proportions of ownership.
  3. Retirement Interest-Only Mortgage: Unlike standard interest-only mortgages, these are usually not required to be repaid until you die or move into long-term care. Each month you only pay the interest, and the capital is repaid at the end of the term.
  4. Retirement Mortgage: Similar to a standard mortgage but tailored to older borrowers, it allows you to borrow against your property while still owning it. You make monthly payments with the flexibility of choosing between interest-only or capital and interest.

Based on our research tool, your age, and property valuation, raising £45,000 through a lifetime mortgage at an interest rate of about 6.19% MER with Standard Life is within the realm of possibility.

The Importance of Expert Advice

Remortgaging, particularly through equity release products, is a decision that comes with many considerations. It’s essential to understand the long-term impact, including how it might affect your entitlement to state benefits and tax position, not to mention your estate’s value.

Given the variety and complexity of these financial products, it’s highly advisable to seek guidance from an independent specialist who understands the whole market landscape. They can provide a bespoke plan that considers your specific circumstances and desires. These experts typically won’t charge you until you’re entirely satisfied with their recommendation and have received independent legal advice.

Moving Forward with Confidence

Building extensions and revamping spaces are common aspirations among retirees looking to tailor their homes to their evolving tastes and needs. With the right financial product, these dreams are certainly achievable. However, the key lies in being well-informed and considering your decision from all angles, ideally with professional advice. By understanding the options available to you and how they work, you can make a confident, informed decision about remortgaging in retirement.