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Retirement mortgage checklist Our guide to borrowing into retirement

Retirement Mortgage Checklist

As the UK’s population continues to age, more and more people are looking to take out a mortgage later in life. Indeed, recent data from The Financial Conduct Authority (FCA) found that 40% of borrowers who took out a mortgage in 2017 will be aged over 65 when their mortgage matures*.

Some lenders put an upper age limit on residential mortgages. But at Leek United, there is no upper age limit** on our residential mortgages, either at the time you apply or the time the mortgage is due to end.

Applying for a mortgage later in life is virtually the same as applying for a mortgage at any other age with Leek United. You might need to provide different documents as proof of income, and it might affect how much you can borrow, but the main steps of the process are the same.

This page runs through the key steps you need to take when arranging your mortgage in later life and explains the main stages in the process.

9 steps to later life borrowing

1. Basic eligibility check

The first step is a basic eligibility check. This is usually done over the phone. Simply call us and speak to one of our advisers. They’ll run you through some simple questions such as the property you’re hoping to buy, the purchase price, how much you need to borrow, if you have a property to sell. 

You’ll need to provide some basic financial information, including details of any pension payments you are already receiving or will be receiving before the mortgage term expires, and some details about your credit history. This should give us enough information to confirm whether you’re circumstances meet our basic eligibility criteria to apply for a Leek United mortgage.

2. Personalised illustration

Assuming you meet this basic eligibility criteria, we’ll arrange a convenient time for you to talk with one of our Qualified Mortgage Advisers (QMAs). This can either be over the phone or face to face in one of our 12 branches across Staffordshire, Shropshire, Cheshire and Derbyshire. The QMA will go through your application in more detail, particularly in terms of your income (including pensions) and expenditure. You’ll need to bring in documents such as your last three months’ bank statements, pay slips, pension statements (or pension projections if you’re not yet retired). We’ll confirm whether you are eligible to apply for a Leek United mortgage, and if so, how much you can borrow and discuss your options in terms of different mortgage products and terms. 

At the end of this process, we’ll recommend a specific mortgage product that best meets your needs and preferences. If you’re happy with it, we’ll prepare a personalised illustration that clearly sets out the details of the mortgage, including key information such as the mortgage term, interest rates, monthly payments and any fees. We’ll also post you a copy of your illustration and an application form so that you can make your formal application.

3. Borrowing limits

The maximum amount you can borrow depends on your age at the end of the mortgage term:

  • If you are under your expected retirement date at the end of the mortgage term, you can apply for a loan of up to 95% loan to value (LTV). That is, a loan that covers up to 95% of the value of the property^. 
  • If you are currently under your expected retirement date, but will be over your expected retirement date when the mortgage term ends, you can apply for a mortgage of up to 80% LTV (80% of the value of the property).
  • If you are already retired or are reliant on pension income to support the mortgage loan, you can apply for a mortgage of up to 70% LTV (70% of the value of the property).

4. Decision in principle

If you need a ‘decision in principle’ letter to show estate agents, you can request one at your meeting with the QMA. It will show how much you can borrow and is valid for 28 days. You can do this even if you haven’t found a property yet. 

5. Full application

When we send you your personalised illustration, we’ll enclose an application form and a letter that explains the next steps. The application form will already be partially completed based on the information discussed with the QMA. When you’re ready to proceed with your application, you just need to fill in the rest of the application form and post it back to us, along with payment for any fees and any supporting documents if not already supplied. 

6. Valuation

Next step is to get a valuation of the property you’re hoping to buy. There are several different types of valuation. A standard valuation report is a basic assessment of the condition and value of the property. You could also choose to have a more thorough HomeBuyers report, or even a full buildings survey. Although more expensive, they may reveal existing or potential defects in the property before you commit yourself to the purchase. We will consider a mortgage on most properties providing the valuer confirms that it is suitable security for the loan.

7. Offer

Assuming the valuation report confirms the property is OK, we’ll send you a formal mortgage offer letter, confirming all the details of your mortgage. We’ll also send a copy to your solicitor, who’ll proceed with the conveyancing.

8. Exchange and completion

This is when it all becomes real. You sign your contract; the seller signs theirs. When your respective solicitors exchange those contracts, there’s no backing out: the house is yours.

9. Moving day

The big day! Amid all the chaos of removal firms, boxes galore and making sure you’ve got every little detail under control, remember to take a minute just to enjoy the moment. 

* Sector views: January 2019, Financial Conduct Authority: https://www.fca.org.uk/publication/corporate/sector-views-january-2019.pdf

**We do consider each application on an individual basis, so if you require a mortgage term up to retirement or beyond: please call us on 0808 169 6680 or email directsales@leekunited.co.uk 

^ We will lend up to 95% provided the mortgage term does not take you beyond the date on which they plan to retire.  This could be earlier or later than age 67 years.

NB. This article is intended as a summary only and does not constitute legal or financial advice from Leek United Building Society. We recommend that you seek independent legal and/or financial advice if you have any questions or queries. You can speak to a Qualified Mortgage Adviser by contacting us on 0808 169 6680.

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YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE