Turning 50 can coincide with the next phase of homeownership. These days, there are so many options available to those who may have retirement in their sights, yet still want a mortgage. In fact, many people discover they’re in a stronger position to switch to a new product, remortgage to a new lender, or buy another property than they’ve ever been before. With established careers and substantial equity, lenders are keen to support borrowers over 50 to explore their mortgage options.

Whether you’re looking to get a better deal on your current mortgage, relocate to your dream property, or expand your property portfolio, understanding your options is the first step towards making it happen. 

Supporting people over 50 with mortgages

Reaching your fifties can put you in an advantageous position when it comes to mortgages. This isn’t the case for everyone, but many borrowers in this age group benefit from:

●      Lower loan-to-value ratios due to existing equity

●      Established, stable incomes.  

These factors give many over 50s lots of borrowing options. 

Standard repayment mortgages

Traditional repayment mortgages remain one of the most readily available options for many borrowers over 50. These work exactly as they always have. You pay both capital and interest each month. This gradually reduces what you owe over the agreed term. 

Best suited for: those who want to achieve a steadily reducing mortgage balance, with the security of knowing that the debt will be repaid at the end of the mortgage term. 

What you need to consider: monthly payments will be higher than a comparable interest only mortgage. However, due to the lower risk to the lender, the interest rates available will often be lower for repayment mortgages.

A practical approach for some borrowers is choosing a longer term initially. You may be able to plan to downsize at a later date, to either lower your mortgage, or clear it altogether.

Interest only mortgages

With an interest only mortgage, your monthly payments only cover the interest. The full capital amount remains to be repaid at the end of the term. You will need what is called a repayment strategy in place to cover what is still owed at the end of the term. This can come from various sources: maturing investments, pension lump sums, inheritances, or property sales.

Best suited for: borrowers with clear, credible repayment strategies and those seeking to reduce monthly outgoings. They’re particularly popular with people expecting significant pension payouts or investment returns, or who know they will be downsizing.

What you need to consider: your debt doesn’t reduce over time. You’ll owe the full amount at the end of the term. Lenders require a solid repayment strategy, and there’s inherent risk if your plans don’t work out. Expect potentially lower loan-to-value ratios, and higher interest rates, compared to repayment mortgages due to the increased risk.

Many borrowers plan to sell and downsize to clear the balance. This provides both a repayment route and the opportunity to reduce future housing costs.

Retirement Interest Only (RIO) mortgages

Retirement Interest Only mortgages are specifically designed for older borrowers, typically those over 55. Like standard interest only mortgages, you only pay the interest each month. However, there’s no fixed end date. The capital is repaid when you sell your home, pass away, or move into care. 

Best suited for: homeowners wanting lower monthly payments or looking to free up cashflow for other purposes. Also, for those who do not have a repayment strategy to clear the mortgage at the end of a pre-agreed term.  

What you need to consider: interest rates may be higher than standard mortgages. The debt remains constant throughout the term. However, unlike some equity release products, you retain full ownership and control of your property (there are no restrictions on selling or moving). It’s sometimes possible to find a RIO mortgage without early repayment charges.

Finding the right fit for your circumstances 

Choosing between these options depends entirely on your financial situation and future plans. Standard repayment and interest only mortgages, as well as RIOs, work well for those with sufficient income to meet monthly payments.

Don’t overlook the role that downsizing can play in your later life financial planning. It might offer the chance to free up equity, reduce living costs, and simplify your housing arrangements whilst securing your long-term financial future.

Getting expert guidance

Before making any decisions, it’s worth seeking independent financial advice. An Independent Financial Adviser can provide advice around your holistic situation, from tax to savings and investment. Mortgage brokers can properly assess your specific mortgage needs and requirements. You can also receive mortgage advice directly from most lenders, such as Suffolk Building Society.

The key message? With proper planning and the right mortgage product, your homeownership goals remain entirely achievable, regardless of your age. Your fifties and beyond can be the perfect time to get your ‘house’ in order.

Paul Blaking, Direct Mortgages Manager at Suffolk Building Society, a mortgage lender, offering mortgages across England and Wales. 

The Society’s downsizing guide can be downloaded here.