Is having a mortgage in retirement right for you?  

If the answer is yes, then we can help.  

Planning for a mortgage in retirement can feel overwhelming. But it doesn’t have to be that way! With the right tools and a clear plan, you can take control of your budget and enjoy a financially secure retirement. Here is how to get started:  

Step 1: Know your numbers 

The first step in budgeting is knowing how much money you have coming in and how much is going out. 

• Income: Add up pensions, rental income, and any other reliable sources of funds.

• Expenses: Include your living costs, bills, and any current payments. 

When you know where you stand, it is easier to plan and avoid surprises. 

Need help? Try our mortgage calculator to see how much you can borrow and what your monthly payments might look like. Understanding your finances is the first step to feeling in control.

Step 2: Explore interest-only mortgages 

Looking for smaller monthly payments?
A Retirement Interest-Only (RIO) mortgage might be the right choice. Here is how it works: 

• You pay only the interest each month, not the loan amount. 

• This keeps your payments smaller and easier to manage. 

With a RIO product, you don’t need to repay your loan until you, or if it’s a joint mortgage, the last remaining one of you dies or decides to live elsewhere long term. For example, if you move into a residential home.

With predictable payments, you will have more financial freedom to focus on what makes you happy.

Step 3: Plan for stability 

Retirement should be relaxing, not stressful. That’s why at Perenna, we offer mortgages with the same payment amount for up to 40 years. This way, you’ll always know what to expect and won’t have to worry about changes. 

Here is why fixing your rate matters: 

• Predictable costs: Your payments stay the same, no matter what happens with interest rates in the market. 

• No surprises: You will always know what to expect each month. 

Fixing your mortgage gives you peace of mind and lets you focus on enjoying your retirement.

How can Perenna help? 

Age is but a number. That’s why our mortgages are designed to fit your needs in retirement: 

• No maximum age caps – giving you options at any stage of life. 

• Predictable payments – making budgeting stress-free. 

• Flexibility as standard – short early repayment charges of just five years. We know life doesn’t stop when you retire. Whether you need a mortgage to help with money, fix your home, or enjoy your free time, we’re here to help.

Take control of your retirement 

Budgeting for a mortgage in retirement doesn’t have to be complicated. With the right plan and the right product, you can make it work for you. 

• Try our mortgage calculator to find out how much you can borrow. 

• Find a broker for tailored advice that fits your needs. 

Retirement is your time to enjoy life. Let Perenna help make it easier! 

You could lose your home if you don’t keep up your mortgage repayments. 

Correct at time of publishing 

Our latest research sheds light on the financial anxieties faced by this demographic regarding mortgage affordability and accessibility. 

Six in ten (60%) of over 55s report a lack of choice and mortgage products tailored to them and over a third (36%) believe their mortgage is restrictive because of their age. 

According to our findings, over a quarter of over-55s (28%) express concerns about affording their mortgage, particularly if it moves to their lender’s Standard Variable Rate (SVR). An extra 36% expect difficulties in managing repayments, bringing the total to almost two-thirds (64%) who may face financial strain. 

 This financial pressure can lead to tough decisions for borrowers later in life. 

Many are left with limited options and are considering selling or downsizing their homes to address their financial challenges. In fact, more than a third (37%) are considering selling their homes to relocate or downsize, with this figure rising to nearly half (48%) in London. 

Traditionally lenders’ age limit restrictions worsen the situation, with nearly two-thirds (60%) of respondents expressing concerns about the lack of tailored financial products for older borrowers. Thirty-six percent feel excluded from the market due to age restrictions, finding their mortgage options restrictive. 

These financial worries not only impact homeowners’ financial stability but also affect their lifestyle choices. Our research reveals that nearly a fifth (18%) of respondent’s report that mortgage repayments have limited their ability to travel or engage in leisure activities.  

Additionally, 17% express concerns about financial stability, while 9% have postponed retirement plans to focus on mortgage repayment. 

 At Perenna, we believe in providing solutions that offer flexibility and give borrowers more options. That’s why we’ve launched our Retirement Interest Only (RIO) mortgage for those aged over 50, featuring a long-term fixed-rate. Starting at a market leading long-term fixed-rate of 5.84% (up to a maximum 60% LTV), our RIO mortgage provides the security of fixed payments over an extended term, ensuring homeowners can enjoy retirement with peace of mind. 

Our CEO and co-founder of Perenna, Arjan Verbeek, emphasised the need for inclusivity in the mortgage market, particularly for older demographics. He stated, “The current UK mortgage market is ageist. A whole demographic is being unfairly excluded and left behind, because of their age. We think that is wrong.“ 

The lack of options for people over 55, compounded by fears of being trapped on their provider’s SVR, is a significant concern. Verbeek continued, “Retirees should have solutions available to live the lives they desire and deserve. Our new long-term fixed-rate retirement interest-only mortgage is a step towards financial freedom for older homeowners.” 

Our new long-term fixed-rate retirement interest-only mortgage is a step towards financial freedom for older homeowners.  

Want to find out more?   

Our mortgages are currently available through mortgage brokers only. So, if you’d like some mortgage advice, that’s no problem. We can help find someone near you. They’ll provide tailored advice based on your mortgage needs. Plus, they’ll know all about our mortgages, so can answer any questions you may have.  

Find a broker. 

 You could lose your home if you don’t keep up your mortgage repayments. 

Notes 

• All data, unless otherwise specified, is taken from 1,003 respondents conducted by Censuswide in January 2024 – all respondents were homeowners aged 55+ and either heading into retirement or already retired. 
• Censuswide abide by and employ members of the Market Research Society which is based on the ESOMAR principles. 
• “Market leading” – determined by lowest fixed for life retirement interest only product on the market as of 4 February 2024 https://www.equityreleasesupermarket.com/compare-deals/retirement-interest-only 
• End of term age limit – this refers to the age by which the borrower has repaid their mortgage. 

All information correct at time of publication

We have launched the “highest affordability” ¹ mortgage in the market to first-time buyers.

We’ve officially opened up our flexible long-term fixed rate product to new purchase customers and first-time buyers, within our pilot to selected borrowers.

We will lend up to 95% LTV, with fixed-rate terms up to 40 years, helping borrowers lower their monthly payment amount. We will also lend up to six times a borrowers’ income, subject to criteria, which could act as a significant lending boost for many first-time buyers who consistently struggle with affordability.  

A longer fixed rate term allows many borrowers a higher affordability boost compared to those on a short-term fixed rate mortgage. This is because of the way current mortgage products are designed which place all the market risk on borrowers. Once this is removed, through fixing the rate for the entire term, first time buyers could borrow more. This is the innovation we offer. 

For example, on a £60k joint income, a first-time buyer could borrow up to £355k with us, which is about £70k more than the closest high street lender.2

This could make a massive difference for first time buyers. As a result, borrowers looking to maximise their borrowing responsibly should consider a longer-term fix compared to a shorter-term fix like a 2 year or 5-year fixed rate mortgage.  

 The product also only carries declining early repayment charges (ERCs) for the first five years, making it highly flexible. This gives borrowers certainty that their payments will never increase, as well as allowing them to change when the time is right for them. 

Colin Bell, COO & Co-Founder of Perenna comments:  

“We’re really excited to open up the Perenna Mortgage to first time buyers and new purchase customers. First time buyers are constantly struggling to get onto the housing ladder due to affordability issues – whether that’s saving up enough for a small deposit or being able to borrow enough to afford a home they really want. The Perenna Mortgage is the complete mortgage product – increased affordability combined with long-term stability and flexibility.” 

Arjan Verbeek, CEO & Co-Founder of Perenna comments: 

“We believe in unlocking the power of homeownership without having to sacrifice the amount you can borrow – borrowers should be able to have both their cake and eat it. As we remove market risk from borrowers, customers can borrow what they actually can afford, which in some cases can be on average up to 30% higher than the high street lenders.3 With our full unrestricted UK banking license and recent funding round, we are ready to deliver the much-needed changes in the UK mortgage market, and start delivering better outcomes for homeowners across the country.” 

How much can you borrow?

Want to find out if Perenna could help you? Why not use our calculator to find out how much you could borrow? It’s completely confidential, does not affect your credit score and should only take a few minutes. If you’re eligible to apply, the quote will also let you know how to access a Perenna mortgage.

You could lose your home if you don’t keep up your mortgage repayments.

Notes:

• Footnote 1 – “Highest affordability” defined as highest borrowing amount by use of intermediary mortgage affordability calculators across leading high street lenders2, as at 13 November 2023 
• Footnote 2 – “Leading high street lenders” defined as those who control 75% of the market by gross lending during 2022 – MM10, UK Finance (as at 13 July 2023) 
• Footnote 2 – “Leading high street lenders” defined as – HSBC, Natwest, Nationwide, Santander, Virgin Money, Lloyds Banking Group, Barclays 
• Footnote 3 – Data chart, see below, as at 13 November 2023:

All information correct at time of publication

Will your age stop you from getting a mortgage? 

Growing older is part of life.  And often, with age, financial security becomes more important than ever.  

For many of us, owning a home is a huge part of that security. And for most people, that means getting a mortgage.  

However, as retirement approaches, homeowners in the UK may find themselves in a tricky situation if they want access to a mortgage. Often the options on offer to them are limited.  

You may have read stories about people who aren’t able to shop around or get a mortgage at all, simply due to their age.  Retirement should be a time to relax and enjoy life away from the pressures of the daily grind. And yet, many may find themselves worrying about their home. 

So why is this?  

Many lenders have an end of term age limit which restricts mortgage options. Look at the example below to see how. 

Borrower 

Age at time of applying: 65 years 

Mortgage term requested: 20 years  

Age at end of term: 85 years 

Many high street lenders will not offer the term asked for.  That’s because they typically have a maximum age of 75-80 years at the end of term¹.

So why can having a mortgage in later life be important?

There are many reasons why people want a mortgage into retirement. It could be to support their lifestyle or to pay for home improvements. Or for some, it’s simply to allow them to stay in the home they love.  

Here are a few examples to bring this to life.

Example 1 

Ann wants to extend her mortgage term so she can reduce her monthly mortgage payments.  

Ann is 65 and has 10 years left on her mortgage. She has a pension income of £25k. She is currently on a standard variable rate of 7.99%.    

Her priority is to have more disposable income. She does not want to have to cut down on things at this stage in her life.   

Example 2 

John and Beth want to pay down their debt as soon as possible. 

John, 54, and Beth, 52 are on an interest only mortgage, with no repayment plan. Their joint income is £80k.    

They don’t want to downsize as they love their property and location. They are looking at a capital & interest repayment product. They would like to keep their monthly payments low. 

Example 3 

Melanie has recently separated from her partner and needs a mortgage that helps her meet affordability requirements. 

Melanie is 56. She is a nurse with an income of £45k.  

Her priority is to remove her partner from the mortgage and avoid having to sell the family home and downsize.   

As the mortgage will rely on her income alone, affordability as well as end of term age limits are stumbling blocks for her.  

How can Perenna help? 

Here at Perenna, we want to help homeowners make the most of their retirement. And for us, age is just a number. That’s why we’ve removed age limits. Instead, we assess mortgage applications on property value and whether the monthly payments are affordable (maximum loan to value limits may apply). This could make a huge difference for each of the examples above. It could be the difference between the borrower achieving their goals and not.  

Want to find out if Perenna could help you? Why not use our calculator to find out how much you could borrow? It’s completely confidential, does not affect your credit score and should only take a few minutes. 

You could lose your home if you don’t keep up your mortgage repayments.

¹Maximum age at the end of the mortgage term (Repayment mortgage examples)  

Nationwide – 75 years old – https://www.nationwide-intermediary.co.uk/lending-criteria/general#max
Halifax – 80 years old https://www.halifax-intermediaries.co.uk/criteria.html;
HSBC – 80 years old https://intermediaries.hsbc.co.uk/criteria   

Information correct as at 16 October 2023 

Correct at time of publishing.

Shining a light on the impact SVR has on affordability

When comparing mortgages, do you focus on the headline rate?

If you do, you’re not alone. But, by looking at the ‘teaser’ rate of a short-term fixed rate (typically between 2 and 5 years), you may be missing the bigger picture. Did you know that the amount you can borrow isn’t usually based on that headline rate? The rate that is actually important in working out how much you can borrow is usually the rate you are charged after the fixed rate period ends. This is known as the ‘reversion rate’. You’ll often see it referred to as ‘standard variable rate’ or SVR.

So, let’s talk more about that…

Standard Variable Rate (SVR)

Fixed rates are a popular mortgage choice. But, when you choose to fix your rate over a shorter-term, you should take note of what happens after the fixed rate ends. The product usually defaults to a higher rate. You may see this next rate referred to as:

• Standard Variable Rate (SVR)
• Follow on rate
• Reversion rate
• Lender’s standard rate

This rate can change at any time and is set by the lender.

The reason this rate is so important is because lenders are required to use it when working out how much customers can afford to borrow.

They use this rate to estimate how much your monthly payments would go up by and check that you can afford it. Additionally, in the UK, lenders must check if you can still afford the mortgage amount you have asked for by calculating your payments using a rate that is at least 1% higher than their current reversion rate. This is called stress testing. Sounds complicated? Don’t worry, let us simplify this for you.

A quick example of how this affects the amount you could borrow

• The ’teaser’ rate on a 2-year fixed product is 5.50%
• The SVR is 8.0%
• The lender will assess whether you can afford monthly payments at a rate of 9.0%

So, in this example, you may be able to afford the monthly repayments at 5.50%. But, to ensure they’re lending responsibly, the lender checks your affordability at 9.0%. This could reduce the amount you can borrow.

Let’s help you to understand by using example numbers. We’ll look at a mortgage of £200,000 over 30 years:

In this scenario, the monthly payment during the fixed rate would be £1,136. But, the lender would need to check that you can afford monthly payments of at least £1,609. That’s £473 more!

Please note, all figures used above are for illustrative purposes only. All information correct at time of publication.

Check how much you could borrow with Perenna

At Perenna, the rate is fixed for the whole term. It doesn’t change to a variable rate. This means we don’t need to stress test your payments. We know exactly what you’ll need to pay each month.

Why not use our calculator to find out how much you may be able to borrow? It’s completely confidential, does not affect your credit score and should only take a few minutes.

You could lose your home if you don’t keep up your mortgage repayments.