Being retired doesn’t mean you have to stop living, and there are many reasons why you may want to get a loan when you reach retirement.
What will lenders look for?
To be considered for a loan, lenders may look at your credit history, your pension plan, if you have equity in your home, any income you may be receiving, stocks, shares, assets and any investments.
So there are plenty of ways for you to be considered for a loan, but you should check with lenders before applying, as some loan providers have a maximum age limit of 75 years old.
Which loans are available?
Remortgage If you have plenty of equity in your home, this type of loan may be a relatively cheap option for borrowing. Some lenders will consider borrowers up to 85 years of age for the end of the loan term.
Equity release mortgage This is usually more expensive than a standard mortgage and careful consideration should be given before applying, as it could affect any children and/or spousal inheritance. An equity release mortgage lets you borrow money from the equity in your home without paying any interest during your lifetime.
Logbook loans This is a higher interest loan but is a quick and easy way to borrow by simply using your car as collateral for the loan.
Personal loan An unsecured personal loan is a popular choice to borrow a small amount of money, although rates can vary greatly between lenders.
Credit cards Even though the interest rate can be high on credit cards, if you can pay the debt off quickly, they can be convenient to use.
Always remember that secured loans such as mortgages and logbook loans can put your home or vehicle at risk of being repossessed if you are unable to make the repayments.
What to consider before taking a loan in retirement
- Be realistic, consider your age and whether you will be able to pay back the loan in full.
- Before applying, check for any age restrictions from the lender.
- Calculate living costs, add for possible future expenses and then look at whether the repayments are affordable.
- Never borrow more than you can comfortably afford to pay back, this is especially important for retirees.
- Do your homework, with plenty of loan options available to you, it is important that you weigh up the pros and cons of each.
