Your house may be worth a fortune, but lenders care about the income you’ll have once the payslips stop. Here’s how mortgage affordability works after 60 and how to plan for it.
You’ve spent 30 years paying off a house that’s now worth £600,000. You want to borrow £120,000 to help one of the children, pay off an interest-only loan or finally fix the roof. Then the lender asks what your income will be at 72, and the answer is less than you’d like.
This catches out a lot of people in their late 50s. Having plenty of equity doesn’t mean a lender will let you borrow. Banks lend against your ability to repay, and in retirement that ability usually shrinks.
The Financial Conduct Authority’s mortgage rules require lenders to check that you can afford the loan, not just that the house covers it. Your property is the security. It isn’t the plan for repaying the loan, and lenders aren’t supposed to approve a mortgage expecting to repossess the house to get their money back.
That changes things once your mortgage term runs past the age you expect to retire. If it does, the lender has to be satisfied that your income after retirement will still cover the payments. Your salary at 58 counts for little if the loan runs to 75. What counts is your workplace and personal pensions, your State Pension and any other reliable income.
Each lender also sets its own maximum age at the end of the term, and those limits vary a lot. Some will lend into your 80s and some stop well before. Choosing a lender is a commercial decision for them. The FCA sets the minimum standard, not the cut-off age.
Take a worked example. You’re 60, earning £55,000, and you want £150,000 over 15 years at 5%. A repayment mortgage costs about £1,186 a month. That’s manageable now, but you plan to stop work at 67.
The lender will want evidence of what comes in after that. The full new State Pension for the 2026/27 tax year is £241.30 a week, about £12,550 a year. If your private pensions add another £15,000, your gross retirement income is about £27,500 a year. Income tax still applies to it, at Scottish rates if you live in Scotland. Repayments of £14,200 a year out of that, before council tax, food and the car, won’t get past most affordability models.
Switch the same £150,000 to interest-only at 5% and it costs £625 a month, or £7,500 a year. That looks much better. But the lender then needs a credible plan for repaying the £150,000 itself, and that’s where many applications fail.
Lenders don’t lend on what your house is worth. They lend on what you’ll be able to pay when the payslips stop.
A retirement interest-only mortgage, usually called a RIO, is built for this situation. You pay only the interest each month, and the loan is repaid from the sale of the house when you die or move into long-term care. You don’t have to repay it by a fixed date. Most lenders set a minimum age, often 55.
The affordability check is still there. It just looks at your pension income instead of a salary. On the example above, £625 a month against a £27,500 retirement income is a much more realistic proposition than £1,186.
RIOs are still a small part of the market. Industry figures for 2025 show roughly 27,000 lifetime mortgages against about 3,000 retirement interest-only loans. The regulator has said it sees rules as a barrier and is reviewing them. In June 2026 the FCA consulted on proposals including removing guidance that lenders check whether a surviving joint borrower could keep up the payments after the other one dies. It also confirmed that its rules don’t stop lenders offering non-monthly payments, such as quarterly. These are proposals until final rules are published, so check where things stand before you apply.
A lifetime mortgage, the most common type of equity release, works differently. You usually don’t have to make any monthly payments at all. The interest is added to the loan and compounds, and the whole amount is repaid when you die or go into long-term care. There’s no affordability test in the usual sense, which is why it suits people whose income wouldn’t pass one.
The catch is the compounding. A £100,000 lifetime mortgage at 6% with nothing repaid roughly doubles to £200,000 in 12 years and passes £400,000 after 24. That comes out of the estate you leave behind. Many plans let you pay some of the interest voluntarily to slow this down. Plans from members of the Equity Release Council include a no-negative-equity guarantee, so you can never owe more than the home is worth.
Equity release can also reduce means-tested benefits, and early repayment charges can be steep if you change your mind. You must get advice before taking one out. That should come from an FCA-regulated adviser with the relevant specialist qualification, ideally one who can also compare it with a RIO, downsizing or a standard mortgage.
The best time to sort out borrowing in later life is while you’re still working. In 2025 the FCA gave lenders more room to let existing borrowers remortgage without borrowing more, or shorten their term, without a full new affordability assessment. That helps, but a lender can still say no.
Start by checking your State Pension forecast on GOV.UK and pulling together statements for every private pension. You can’t prove a retirement income to a lender if you don’t know what it is. If you have an interest-only mortgage with no repayment plan, deal with it in your 50s. Waiting until the term ends at 66 leaves you with fewer options.
Look honestly at whether downsizing does the job without any debt. Talk to anyone who would inherit, because every option here reduces what you leave them. If you have a defined contribution pension and you’re 50 or over, you can book a free Pension Wise appointment through MoneyHelper to understand your income options. That’s a sensible step before you go to a mortgage adviser.
This is a big, personal decision, often involving your home and your estate. Take regulated advice before you sign anything.
UK lenders judge a mortgage after 60 on whether your retirement income can cover the payments, not on how much your home is worth. If a standard mortgage won’t pass that test, a retirement interest-only mortgage or a lifetime mortgage may be options, but each has real costs for you and your estate. Plan in your 50s, know your pension income and get advice from an FCA-regulated adviser before deciding.
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