Equity release is not the only way to deal with an interest-only mortgage in your 60s. Lenders offer standard mortgages to borrowers in their 60s and 70s, and for someone who is still earning, that can be a better route than a lifetime mortgage.

This case study covers Stuart, who came to us at 61 assuming equity release was his only option. Our adviser Neil Massam arranged a repayment mortgage that clears his balance by age 75.

Meet The Client 👨

Stuart (61), from Wigan, is single and works as an employed professional. He plans to retire at 75.

His home is worth around £225,000. It had a £157,000 interest-only mortgage with four years left on the term, and he had no other debts.

The mortgage had been on interest-only since before the 2008 credit crunch, so the balance had not come down.

The Challenge He Faced 🏡

The promotional rate on Stuart's mortgage was coming to an end. He did not want to tie into another interest-only deal. With four years left on the term, the full £157,000 would have been due at the end of it.

Stuart wanted to keep his house and use his income to bring the mortgage down to nil. He needed the monthly payments to stay manageable while he did it.

He assumed equity release was his only option. He thought he was too old for a traditional mortgage.

How We Helped 💡

Stuart was not too old for a traditional mortgage. Lenders set their own maximum age for the end of a mortgage term, and they assess whether the borrower's income will cover the payments for the whole of it.

Why equity release was not suitable. Stuart wanted to repay what he owed. A lifetime mortgage is not set up to do that. No monthly payments are required, and the interest is added to the loan unless the borrower chooses to pay it. Overpayments would have been allowed, but there is no repayment schedule that takes the balance down to nil.

Stuart also qualified for a standard mortgage, and the rates were lower than on a lifetime mortgage.

The repayment mortgage. Neil recommended a remortgage of £157,000 on a capital and interest basis over 14 years. That is around 70% of the value of Stuart's home. Every payment covers the interest and part of the capital, so the balance falls each month and reaches nil when Stuart is 75.

The lender accepted Stuart's employment income up to age 75, on the basis that he can comfortably continue in his role until then. The 14-year term is what kept the monthly payments manageable.

The Outcome 📝

The remortgage completed 11 weeks after Stuart's first enquiry. His interest-only mortgage was repaid and replaced with a repayment mortgage for the same £157,000.

Stuart keeps his house. For the first time since before 2008, his monthly payments are reducing what he owes. If the mortgage runs its full term, it will be repaid when he is 75, the age at which he plans to retire.

Why Advice Matters 🤝

Stuart came to us believing equity release was his only option. He qualified for a standard mortgage at a lower rate, with a date by which his home will be mortgage-free.

A repayment mortgage to 75 has its own conditions. The payments are higher than on interest-only because they include capital. They have to be made every month for 14 years, the mortgage relies on Stuart's income continuing to 75, and the home is at risk if the payments are not kept up. A lifetime mortgage has no required monthly payments, but any unpaid interest is added to the loan and compounds, so the balance grows instead of falling.

As a whole-of-market broker, we check which standard mortgages, RIOs and lifetime mortgages a client qualifies for before recommending any of them. You can read more on our later life planning page and in our guide to the alternatives to equity release.

Equity Release or a Standard Mortgage? Your Questions Answered 🙋

Am I too old for a standard mortgage at 61?

Not on age alone. Lenders set their own maximum age for the end of the term, and they assess whether your income will cover the payments for the whole term. Stuart's lender accepted his employment income up to age 75. Our guide to mortgage options for the over 55s covers the main routes.

Can a lifetime mortgage be repaid like a repayment mortgage?

It is not designed to be. No monthly payments are required, and any unpaid interest is added to the loan. Plans that meet Equity Release Council standards allow voluntary partial repayments within the lender's limits, but there is no schedule that clears the balance by a set date.

What happens when an interest-only mortgage reaches the end of its term?

The full balance is due. The ways of dealing with it include switching to a repayment mortgage, a retirement interest-only mortgage, a lifetime mortgage, or selling and downsizing. Which of these are available depends on your age, income and property value.

Are standard mortgage rates lower than equity release rates?

In Stuart's case they were. Our post on why equity release interest rates are higher explains how the two are priced. A standard mortgage has to be affordable from your income for the whole term, which a lifetime mortgage does not.

Find Out Which Options You Qualify For

We check standard mortgages, RIOs and equity release and tell you which you qualify for and what each would cost. Get in touch to arrange a conversation with one of our advisers, or read more of our equity release case studies.