Can I Get an Interest-Only Mortgage at 55?

As a 55-year-old, you may be wondering if you can still get an interest-only mortgage. The short answer is yes, you can! Interest-only mortgages are available to borrowers aged 55 and over, provided you meet certain eligibility criteria. In this article, we’ll explain what an interest-only mortgage is, the pros and cons, and how to get one at 55.

What is an Interest-Only Mortgage?

With an interest-only mortgage, you only pay the interest on the loan each month, not the principal. This results in lower monthly payments compared to a traditional repayment mortgage where you pay off interest and principal.

At the end of the mortgage term, you still owe the original loan amount You need a plan to repay this lump sum, either by selling the property, refinancing, or using savings

Interest-only mortgages suit borrowers who want lower payments to free up cashflow or need flexibility They are not suitable if you can’t repay the capital at the end.

The Pros and Cons of an Interest-Only Mortgage

Pros:

• Lower monthly payments than a repayment mortgage
• Potentially borrow more as payments are lower
• Flexibility if your circumstances change
• Useful for short-term plans like bridging finance

Cons:

• You still owe the original loan at the end
• Risk of repayment shortfall without a solid plan
• Higher deposit usually required (around 30%)
• Potential early repayment penalties

Careful planning is key to ensuring an interest-only mortgage meets your needs.

Can I Get an Interest-Only Mortgage at 55?

The good news is several lenders offer interest-only mortgages to over 55s. Some key points:

• Age limit: Most lenders will consider borrowers up to age 80. A few lenders go up to 85.
• Affordability: Your income and expenditure are assessed to check if payments are affordable. Pensions and assets are considered.
• Deposit: You’ll likely need at least a 30% deposit of the property’s value.
• Term length: Interest-only terms up to age 85 are possible. Shorter terms may have lower rates.
• Repayment plan: You must have a credible plan to repay the capital at the end. Savings, investments, downsizing can all be used.

Interest-only deals for over 55s fall into two main categories:

• Standard interest-only – For terms up to age 80-85. Need repayment plan.
• Retirement interest-only (RIO) – No set end date. Loan repaid on death/entering care.

Speak to a mortgage broker to explore your interest-only options at 55. They can find deals matched to your needs and circumstances. With some planning, an interest-only mortgage can offer flexibility later in life. The key is working out if it suits your long-term goals.