I need to borrow more on my mortgage but my only income is my pension
Every pensioner is different and getting a mortgage in retirement can be tough. There are two main dynamics that hinder the borrowing potential: repayment type and age but you can still get a mortgage on pension income .
For the last decade Mortgage Lenders have by and large limited the majority of their lending on residential property to “capital and interest repayment” loans. From a regulatory perspective it’s a no brainer as at the end of the term, provided the repayments have been kept up, the mortgage is repaid. However, the shorter the mortgage term the greater the resulting capital repayments and this often blows up the Mortgage Lenders affordability assessment which work on monthly income versus outgoings.
At Niche Advice we always look to assist and sometimes the use of second mortgage is the preferred solution. Second mortgages fall under the same Regulator but have some subtle differences: namely higher income multiples and willingness to lend for longer. These greater tolerances can result in greater borrowing potential.
One second charge lender that we are using a lot recently, has the following main criteria:
• Income multiple circa 6 times (less existing first charge mortgage).
• They will lend up to age 80 years (eldest applicant) at the end of the term.
• Minimum term 3 years, so if affordable you could apply up until your 77th birthday.
• First applicant must be receiving combined pension income (state and private) of at least £16,500.
• The property must be worth at least £100,000 and have a mortgage on it already.
• Loans from £3,000 to £1,000,000.
• Up to 4 applicants can go on the form (all must reside in the property).
Evidence needed to support your mortgage application
Where the pension company only provides an annual statement, the last 2 months’ bank statements showing the pension income being credited will also be required.
Niche Advice offers suitable advice to applicants looking to borrow into retirement. You will have your own designated Mortgage Adviser. There is not a call centre culture. To find out if you can obtain a mortgage on your pension complete the online form under the ‘Contact’ tab or call T: 020 7993 2044 and ask for me personally.
Author: Payam Azadi
Payam Azadi is a partner at Niche Advice who are whole of the market Independent Finance Brokers In London. His role is very much focused on Property financing both on residential and commercial lines.