How Much Can You Borrow With a Retirement Interest Only Mortgage
How much you can borrow with a retirement interest only mortgage depends on two limits: the loan-to-value cap for your age and the affordability of the monthly interest payment. Lenders set maximum LTVs that rise with age, because older borrowers have a shorter expected loan term, but affordability is usually the tighter limit.
Work through affordability first. Add up your annual retirement income from pensions and other regular sources, then work out what monthly payment leaves comfortable room for living costs. At 5.5%, every £10,000 of borrowing costs about £46 a month, so a £400 monthly budget supports roughly £87,000 of borrowing before other costs are considered.
Then check the LTV cap. If the lender allows 40% LTV at your age on a £300,000 property, the cap is £120,000, so affordability, not LTV, decides the answer in that example. The lower of the two limits is the maximum, and most borrowers end up below it for comfort.
- Two limits apply: age-based LTV cap and income affordability.
- At 5.5%, each £10,000 borrowed costs about £46 a month.
- The lower of the two limits is the real maximum.
Try the free calculator to work out your own figures in seconds.