Are you a homeowner approaching retirement age, but need quick access to funds for a new property purchase, home renovations, care fees, or other time-sensitive financial needs?
You may be surprised to learn that bridging loans can be a versatile borrowing solution, even for pensioners and retirees.
Bridging loans, also known as bridging finance, are a type of short-term loan secured against property. While they are sometimes overlooked by older borrowers, the reality is that pensioners and retirees can absolutely qualify for and benefit from these flexible financing tools.
Bridging Loans for Pensioners – The Basics
One of the main misconceptions about bridging loans is that they are only accessible to younger, employed borrowers.
In reality, bridging lenders assess these loans primarily based on the available property equity and the borrower’s overall financial position – not just age or retirement status.
Unlike traditional mortgages that heavily rely on income verification, bridging loans are secured against the property itself. This means lenders are more interested in the value and condition of your home than your age or whether you may be retired.
As long as you have sufficient equity in your property, you can likely access the short-term funds you need through a bridging loan, regardless of whether you’re retired or still working.
How do bridging loans work?
A bridging loan is a form of short-term borrowing that is always secured against a property. The property can be residential, commercial or semi-commercial.
Bridging loans are set up fast, usually within 1-2 weeks.
The money is used for short-term borrowing until you are able to pay it back using a lump sum. The interest is charged monthly so you won’t want to keep it a day more than you need to.
Bridging lenders aren’t interested in a long-term loan arrangement with you. They give fast decisions and expect full repayment by the end of the term. Terms can be from 3 months to 24 months normally.
If the loan is associated with your main residence it is classed as a regulated loan and has a maximum term of 12 months.
As there are no monthly payments, your disposable income is not the lenders main concern.
Let’s talk bridging loans!
Criteria and costs
Contrary to common misconceptions, there is generally no maximum age requirement for pensioners and retirees to qualify for a bridging loan.
The main eligibility criteria tend to focus on the property being used as security and your planned exit strategy (how you will repay it).
Bridging lenders will typically require at least 30% equity in the property being used as collateral. This gives you a 70% LTV bridging loan.
A 75% loan might be achievable from certain lenders.
It’s important to note that bridging lenders focus more on your “exit strategy” – i.e., how you plan to repay the loan – rather than your income or employment status. As long as you have a reliable plan in place, there is a good chance you will be able to secure bridging finance.
Read more: Bridging loan exit strategies
When it comes to the costs, bridging loans for pensioners typically have the following fees and charges:
- Lender Fee – Usually 1-2% of the loan amount, which can often be added to the loan.
- Exit Fee – Some lenders charge an extra month’s interest on repayment, though we aim to use lenders without exit fees where possible.
- Valuation Fee – A fee to cover the cost of a property valuation, which increases with the property value.
- Legal Fees – You’ll need to cover the legal costs for both your own solicitor and the lender’s.
Interest rates on bridging loans are higher than for standard mortgages, the lowest rates are reserved for applications with a lower loan-to-value (LTV) ratio.
Bridging loan uses
Bridging loans offer a remarkable degree of flexibility, proving invaluable in various situations where quick access to capital is essential.
Here are some scenarios where a bridging loan could be an option if you are retired:
Downsizing or Relocating
Secure your retirement home without the stress of waiting for your current property to sell. A bridging loan lets you move at your own pace, ensuring a smooth transition.
Holiday Home or Investment Property
Fulfil your dream of owning a holiday retreat or generate additional income with a buy-to-let investment. A bridging loan can bridge the gap until you secure long-term financing or complete renovations.
Preventing a Property Chain Break
If you’re part of a property chain and your sale or purchase is at risk of falling through, a bridging loan can provide the necessary funds to keep the transaction moving.
Covering Unexpected Costs
Whether it’s unforeseen medical expenses or helping a family member, a bridging loan can provide a financial safety net with quick access to cash.
For business purposes
A short-term bridging loan can be used for almost any purpose. If you are self-employed, or have your own business, you can generate money to help purchase equipment, stock or just for cash flow. Commercial bridging loans are available for almost any purpose and are secured against a commercial property, either one you own or one you are buying.
Read more: What can a bridging loan be used for?
Are they right for you?
Can you get a bridging loan if you are retired?
Yes.
Should you get a bridging loan if you are retired?
Maybe?
These loans are designed to give you access to fast money but they are not suitable for everyone, regardless of age. You borrow against your home or another property you own.
Fast decisions, fast processing and the minimum of questions. In this respect they are unmatched.
But the most important aspect to remember is that they are always for the short-term. You cannot get a 5 or 10 year bridging loan, they don’t exist.
If you do find that a short-term loan will help with a project or a predicament, you need to be certain on how it will be repaid and when.
The role of a finance broker
It’s fair to say that the world of bridging finance is not always consumer friendly, and it can be difficult to understand what type of loan you actually need.
One of the reasons behind this is that most of the lenders don’t want to deal directly with borrowers, at least not from the start.
They prefer to rely on their network of brokers to talk to prospective borrowers, educate them on the various options, discuss the costs and fees and make sure that they are a suitable customer.
For this reason, lots of bridging providers are hard to find.
But it’s not so hard if you use a specialist broker.
It’s their job to know the lenders, their rates, their terms and the type of loans that they provide.
Bridging lenders are known to work swiftly and give fast lending decisions. To do this, they need the help of brokers to get all of the essential information together right from the start.
So if you want a bridging loan, please call us on 0330 030 5050 and we will put you in touch with a specialist bridging broker.
Need some help?
If you need a short-term bridging loan then a specialist broker is a good place to start. You will get expert help and advice along with a wide range of lenders to choose from.
To get matched with a specialist broker, please call us on 0330 030 5050.