Pension mortgage interest rates are the same as for anyone else. It essentially depends on your income, credit history and how much deposit you have.
All lenders are different, which is why you should talk to one of our advisors. We have access to the whole market, not just a handful of lenders, so we should be able to find the best rates for you.

If the question is, can I get a mortgage using my pension with bad credit? The answer is a simple ‘yes’, depending on your circumstances. Some things that may affect your application are:

• Adverse credit overview
• Low credit score
• Mortgage Arrears
• Defaults
• County Court Judgements (CCJs)
• Individual Voluntary Arrangements (IVAs)
• Debt Management Plans (DMPs)
• Bankruptcy
• Repossession

If you are looking to borrow on a mortgage term that runs past your expected retirement age, the process can vary from lender to lender, generally depending on how close to retirement you are. Many lenders will insist that customers borrowing into their retirement will need to provide full documented evidence of how you will afford the mortgage throughout the full mortgage term including future pension projections and/or statements. The criteria and requirements will be different though dependent on the lender, and we are here to help guide you through that journey.

If you’re looking to borrow on a mortgage term that runs past your expected retirement age, the process can vary lender to lender, generally depending on how close to retirement you are.

Many lenders will state that those borrowing into retirement at all will be required to evidence how they’ll afford the mortgage when working income ceases – demanding pension projection statements and all sorts.

Others are less picky and so long as the mortgage is affordable using working income, and there is a solid plan to repay, then fewer documentation is required.

The cut off for whether more evidence and documentation is needed is often if the application is within 10 years of the expected retirement date (for example, a 55 year old who plans to retire by 68 and borrow until 70, is 12 years from retirement and may not need as much evidence as a 59 year old in the same scenario).

Many lenders cap the age at application to a certain level, often 60-65, however there are some who specialise in mortgages for older people with higher or indeed, no maximum age limit.

The advisors we work with know which lenders will allow a mortgage on pension income, and those which have higher or no age limit.

Older borrowers can be considered as carrying greater risk as they have a higher likelihood of falling ill; and having a greater financial pressure to cover the cost of care or accessibility changes to their home, as well as being deemed ethically more difficult to repossess (a fair amount bad press would come with kicking a pensioner onto the streets!).

As with maximum age at application above, for similar reasons there are often limits for a borrowers age at termination/repayment of the mortgage. Many lenders cap this at retirement age, some at age 70-75, and thankfully there are some with no maximum age limit at all (so technically, borrowing to age 100+ is possible if the mortgage is considered affordable).

In the case of a mortgage for people on a pension, mortgage lenders are required to establish if the income is suitable and viable to sustain repayments throughout the term of the mortgage.

Pension income is just about as reliable and stable an income as one could receive, so long as it can be evidenced as such, and most lenders will consider 100% of the income (for other income types some lenders only consider a smaller % than actually earned, depending on risk).

There are many different types of income that could be considered for a mortgage application:

• Employer pension income
• State pension income
• Private pension income
• Widows pension income
• Armed forces pension income
• Self-employed retirement income
• Disability pension (benefits)

To evidence these, lenders will usually want to see pension statements (act as payslips and indicate gross and net pay as well as tax paid etc), perhaps a pension certificate/contract if recently retired, or for those who own a business, business accounts and/or self-assessment documentation (common for those who receive rental buy to let property income in retirement, or perhaps own shares in a business they have little involvement with – figures used would be share of net profits, or salary+dividends, depending on lender and trading style).

Most lenders ask for monthly pension statements / payslips and corresponding bank statements to evidence these payments being made, so they can assess mortgage affordability on a pension.

Some require the latest month, some 3 months, and the odd one or two require 6.

For this reason many borrowers are instructed to wait until they have the appropriate number of months before they can apply – this isn’t the case as some don’t need any and will lend before or from day 1 of retirement, so long as there is enough documentation to back up the figures being used.

If the borrowers have other income (perhaps part time or casual work), then some lenders can consider it as well as the pension income, depending on how long the borrower plans to work there, how long they have worked there, and if its feasible they can sustain the role (i.e. a bricklayer at age 75 may not be approved).

In this scenario someone with a pension income plus a part time role earning £5k a year would potentially be able to borrow an additional £20k, if the lender offers borrowers up to 4x income.

We are asked regularly whether ill health can impact a pension mortgage approval in the UK, and generally the answer is that lenders are not allowed to discriminate based on health, and as such borrowers would/should never be asked the question about their health.

It may well be more expensive, but for those borrowing for a mortgage on a pension, insurance can be all the more important, especially if pension income from 2 applicants are both necessary to meet monthly repayments, and the pension does not transfer should one of them die.

Transferring a pension if one partner passes away
This is a sad and tragic time for the surviving partner, especially if the deceased partner had a higher pension.
Whether you can transfer their pension depends on the pension schemes rules and policy conditions. Usually pension schemes will only transfer pensions to a legally married spouse or civil partner.

The answer is yes, but the same criteria applies in regard to income and affordability in regard to affordability. Self-employed have a number of obstacles to overcome, including how long they have been trading and proof of income.