Can you get a Pension Mortgage in the UK? Discover how you can access a mortgage while claiming your pension and the various factors that you need to consider.

What type of mortgage can I get with my pension income?

When you are trying to borrow into retirement, you might think your options are limited, but that is not the case. In fact, many lenders are much more flexible than you might think. 


Private pension income mortgage

If you have a private pension, acquired from working within the private sector before you retired, then some lenders will allow you to use that pension to claim a mortgage.

Each lender differs, but many will require you to show how you intend to pay off your mortgage, and what monthly pension payments you expect to receive so that they can calculate how much you can afford to borrow.


Feel Free to Contact Us

Call Damian
Email Us
Call Office

State pension income mortgage

Alternatively, if you spent most of your life working in the public sector then you will receive a state pension mortgage, which can also be used as part of a mortgage application with certain lenders.

As with the private pension income mortgage application, you will likely need to highlight how you are going to pay off your mortgage.


Interest-only pension mortgage

One of the main benefits of an interest-only mortgage is the lower monthly repayments. However, that doesn’t mean you don’t need a plan for paying off the capital once your loan period ends. This payment can come from various places, such as bonds, shares, sale of another home, investments, or savings.

If you want to pay off your mortgage using the money from your pension, this is possible. Certain lenders are willing to allow the 25% tax-free lump sum from your pension to be used as payment.


How will lenders assess me for a pension mortgage?

Each lender has different criteria that they consider when deciding whether to accept a pension-backed mortgage application in retirement. However, the good news is that the market is full of mortgage lenders that specialize in this type of mortgage and will allow you to use your pension to pay your mortgage, as long as certain criteria are met.


The key criteria lenders assess are:

What sort of mortgage are you trying to get?

Are you currently working and planning on borrowing into retirement? When do you plan on retiring? Or are you already retired? Here are a few key criteria that mortgage brokers will consider before offering you a mortgage:

  • Your age when you apply
  • Your age when the mortgage term ends
  • The type of pension income
  • How long has the pension income been paid?
  • Any other income to support the application
  • Other standard criteria

How much interest should I expect to pay on a pension mortgage?

Pleasingly, pension mortgage interest rates do not differ from normal mortgage rates. Therefore pension payments should not differ from normal mortgage payments. Ultimately, it will come down to the usual factors, such as the size of your deposit, credit history, and income.


Will bad credit affect my application for a mortgage with pension income?

As with any mortgage application, bad credit will lower the value of your application and will result in fewer offers or offers that are less favourable than those with good credit. However, there are bad credit mortgages on offer, as long as you meet some of the below criteria:

Little or no credit score mortgages

Adverse credit overview

Mortgages with an IVAs

Mortgages with arrears

Bankruptcy mortgage

Mortgages with defaults

Debt Management Plan (DMP) Mortgages


Can I get a mortgage when already in retirement?

Absolutely! However, getting a mortgage if you have already retired will be completely different to getting one before you retire.

If your only income is your pension, then it is normally the figure mortgage lenders will focus on when they are calculating what you can afford to borrow.

On average, lenders tend to offer 3-4x your income, although some even offer as much as 5-6x if the circumstances are right.

However, for anyone who is already retired, then the amount will drop as often the maximum mortgage term is lower due to the maximum age limit compared to someone younger.


Can I get a mortgage when working that stretches into retirement?

If you plan on borrowing on a mortgage term that will lead you into retirement, the process will differ depending on which lender you choose and how close your planned retirement age is.

Most lenders will ask for you to share evidence of how you plan to pay the mortgage when you retire and your income drops. This can come in the form of pension projection statements, for example.

Other lenders may not be as strict on this, as long as your mortgage is affordable and there is a clear repayment plan.

You can always contact a mortgage broker if you are interested in a pension income mortgage.