Unlike a conventional residential mortgage, a retirement mortgage isn’t linked to a specific term and is only repaid when your property is eventually sold.
Yes, a retirement mortgage offers two key protections, usually only available via an equity release arrangement: A 'no negative equity' guarantee An option to switch to a lifetime mortgage when the policy has been running five years and the youngest borrower reaches 80 years of age
Once the plan has been in place for five years and the youngest borrower reaches 80 years of age you can elect to switch to a lifetime mortgage. This type of mortgage doesn’t require repayments, and the interest rate applied would be the lifetime rate available at that time from your provider. This interest rate could be higher but this feature ensures that later in retirement you can remain in your home even if your payments become unaffordable.
Some mortgage providers will allow you to maintain a mortgage in retirement providing you can afford the payments, although it will need to be repaid at a specific age. If you're in or near retirement you can also consider your suitability for a retirement mortgage or equity release plan.