Content Writer
Mortgage Advisor & Director
Buying a retirement property, purpose-built for those who are retired or over a certain age (usually 55), can be an excellent way to downsize and live in a more supportive environment as you approach a new chapter in your life. However, securing a mortgage on a retirement home can be more complex.
Here, we’ll explain how mortgages work for retirement properties, what the eligibility criteria looks like, and some alternative ways to fund your purchase. We’ll also cover what interest rates to expect, which UK lenders may consider your application, and how to find some extra guidance and support.
Can you get a mortgage to buy a retirement home?
Yes, it is possible to get a mortgage for a purpose-built retirement property, although you may find your pool of lenders to choose from is smaller and the criteria stricter.
There are three common scenarios where you might consider buying a retirement property with a mortgage:
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Older borrowers buying for themselves: If you’re over 55, you might want to explore standard mortgages with higher age limits or later life lending options. This could include retirement interest-only (RIO) mortgages, equity release, or a traditional repayment mortgage if you meet the affordability criteria. Specialist lenders can be flexible on age limits and income sources.
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Family members buying for elderly relatives: Adult children can buy a retirement property to house an ageing parent, either as a second home or via a buy-to-let mortgage, depending on the arrangement. However, certain lenders may apply restrictions on property types and who can reside there.
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Investors purchasing a retirement property: Some investors may look to buy a retirement home (like a flat) to rent out to eligible retirees, but this is rarer due to limited resale markets and tenant restrictions. Many lenders won’t allow standard buy-to-let mortgages on retirement housing.
Lending criteria for retirement properties
Getting a mortgage on a retirement property usually comes with a unique set of criteria, often stricter than standard mortgages. Here’s what lenders consider:
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Your age and income: Your age may limit your options for lenders, as many have age limits (depending on the mortgage product being used). It will also make a difference to lenders where you earn most of your income (pensions, annuities, savings and investments, etc.).
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Type of property: Most retirement properties tend to be leasehold flats with age restrictions. This means residents usually need to be at least 55 years old to live there, sometimes older. The heavier the restrictions on occupants and the higher the minimum age, the fewer lenders will be available to you.
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Length of lease remaining: Many lenders have strict limits relating to the remaining years left on the lease for a leasehold property. This applies to most leasehold purchases and not just retirement properties.
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Added costs: If the retirement property is a leasehold, it will likely come with added expenses such as service charges or ground rent. If it’s a managed complex, there may be extra costs for services like medical assistance or on-site care. Some lenders will be fine with this, but will want to see all the details relating to any ongoing costs (which can impact your affordability).
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Ease of resale: If the property comes with lots of restrictions, has cladding, an expensive structure for service charges, or anything that could limit the number of potential buyers in future - this won’t appeal to most lenders and could be a long-term risk for them. The property’s location and reputation can also make a difference.
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Deposit and purchase method: The size of your deposit and loan-to-value (LTV) ratio will influence each lender’s risk assessment, and some may have maximum LTV ratios for older borrowers. Whether anyone else is contributing to the purchase of the retirement property can also be a factor.
How to get a mortgage on a retirement property
If you’re applying for a mortgage on a retirement property, finding suitable lenders and comparing all the various criteria can be time-consuming and complex. Each lender will assess retirement properties differently, especially when it comes to lease terms, age restrictions, and whether the property includes extra care services.
Speaking with an advisor who specialises in retirement property mortgages can be a huge advantage, helping you navigate the market and find the most suitable deal. Our advisors can introduce you to the right lender based on your age, deposit, income, and your long-term home ownership goals in retirement.
If you’d like a free, no-obligation chat with a broker who specialises in retirement property mortgages, you can get started below:
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What interest rates to expect
Interest rates on retirement property mortgages can be higher than for standard homes, mainly due to the perceived resale risk and the specialist nature of the housing. Examples of some factors that may affect the rates available include:
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Your age and income (and whether you have any debts or significant assets)
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The size of your deposit (lower LTV typically means lower rates)
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The type of mortgage (repayment, RIO, lifetime mortgages, etc.)
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The lender’s confidence in the property’s resale potential and location
You can use our free comparison tool to see the latest interest rates for mortgages, giving you an idea of what’s available. But keep in mind, rates for retirement properties are likely to be higher and there are no equity release or RIO products included on our service. The best way to get realistic figures is by having a brief discussion with an experienced mortgage advisor.
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UK mortgage lenders for retirement properties
Not all lenders will offer mortgages on retirement properties, especially if the development has extra care facilities or strict leasehold conditions. However, there are a few mainstream options available:
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Halifax: Consider retirement properties on a case-by-case basis, particularly if you’re buying for yourself. With Halifax, there must be a minimum of 70 years unexpired on the lease at the time of the mortgage application and their maximum age for all lending (at the end of the term) is 80.
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Nationwide: Although Nationwide no longer offers lifetime mortgages and retirement mortgages to new applicants, they may consider residential mortgages for certain retirement properties. However, stricter conditions apply, including restrictions around lease lengths and service charges.
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Leeds Building Society: One of the more retirement-friendly lenders, Leeds Building Society offers both standard and RIO mortgages on eligible retirement flats, provided there is at least 85 years left on the lease. They also don’t have a maximum end-of-term age with most mortgages.
If you want to compare all your options and check the current rates on retirement property mortgages, it’s best to speak with a specialist mortgage broker.
Why choose Teito for your retirement home mortgage?
With our free comparison tool, you can view mortgage rates from lenders across the UK, including those who consider retirement property mortgages and later life lending options. We also offer expert support through specialist brokers who understand the added complexity of buying into retirement communities.
Whether you’re looking for a retirement property for yourself, a family member, or exploring later life lending options, our experienced advisers will help you find the most suitable lender and secure the best possible terms.
Here’s why people across the UK trust us to help with retirement property mortgages:
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Easily compare current mortgage rates online for free
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Our brokers are 5-star rated on leading review sites
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Free initial chat with no obligation to proceed further
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Access to lenders who accept retirement property purchases
If you’d like to compare retirement property mortgage deals or speak with a broker who specialises in this area, you can get started here.
FAQs
Retirement properties can offer a range of benefits, including increased security, on-site support, a ready-made community of similar people, and access to facilities tailored for older residents. Many developments also include services like communal lounges, gardens, or activities that help build a sense of community for residents.
Choosing an Adviser
Selecting a qualified and experienced mortgage adviser is of great importance. To choose a suitable adviser, evaluate their qualifications, experience, and reputation, and ensure they are regulated by the Financial Conduct Authority (FCA).
Read reviews from previous clients and make sure they provide a clear explanation of the products and services they offer, as well as the fees and charges associated with them.