Here at Perenna, we want to help homeowners make the most of their retirement. And for us, age is just a number. That’s why we’ve removed age limits at application and at the end of the mortgage term for some of our products.
Overview of our criteria
Not sure which is best for your client? You can easily compare our product offering below.
| Repayment | IO | RIO | |
| What age can they use earned income until? | 70* – As long as they are more than 10 years from retirement, and more than half of the mortgage is not taken into retirement. Evidence of pension contributions however is required if lending into retirement. | 70* – As long as they are more than 10 years from retirement, and more than half of the mortgage is not taken into retirement. Evidence of pension contributions however is required if lending into retirement. | We will use the lower of the customer’s earned income or retirement income for affordability purposes |
| Max age | No max age | Lending into retirement is not allowed where sale of mortgaged property is the repayment vehicle. No max age if they have an alternative repayment strategy. | No max age |
| Min age | 18 | 18 | 50 |
| Max term | 40 years | 25 years | Term will run until both customers have passed away or gone into long term care. |
| Minimum term | 10 | 10 | Term will run until both customers have passed away or gone into long term care. |
| Affordability stress test | Stress test based on Repayment calculations | Stress test based on Repayment calculations | Stress test based on Interest Only calculations |
| Joint Incomes considered for affordability? | Joint earned or retirement incomes considered for affordability | Joint earned or retirement incomes considered for affordability | Can use both incomes if transferrable upon death of the first borrower, or where sale of property is the intention. |
*Retirement age used is lower of declared or 70.
Legal Advice for Lending into Retirement
Where the age of the oldest applicant is 80 or above at the point of application, the applicant must obtain independent legal advice. The independent legal advisor must complete a declaration confirming the applicant understands and consents to the mortgage terms.
Key information
We apply a standard retirement age of the lower of the applicants declared retirement age, or 70 years old – whichever comes first.
Where the customer(s) are within 10 years of retiring at the point of the application, or if more than half of the mortgage term is beyond their retirement age, we will assess affordability based on the lower of employed or projected retirement income.
Applicants who are already retired will have their affordability assessed based upon their current retirement income.
LTV will be restricted to 70% where the oldest applicant is aged 65 or above at the date of the application, and their age at the end of the mortgage term exceeds 85.
Retirement Interest Only (RIO)
The minimum age is 50 for all applicants. Maximum LTV of 60% (including any fees added to the loan).
Affordability will be assessed on an interest only basis. If any applicants are not yet retired, the lower of non-retired income and retirement income will be used in the affordability assessment.
The repayment vehicle for the mortgage is a ‘life event’ i.e. death or long-term care.
To use both incomes for affordability on a joint application, the incomes must be transferrable upon death, or the applicants must intend to sell the property. This is to ensure that there is a plan in place for the surviving applicant.
Brokers must explain to any applicants who would like to proceed with a purchase RIO application that they will need to obtain independent legal advice. The independent legal advisor must complete a declaration confirming the applicant understands and consents to the mortgage terms.
Remortgage applications for RIO products include fees assisted legal work with our partner law firm. This firm will require (as a minimum) a face-to-face meeting with the applicants prior to completion to ensure that they fully understand the mortgage terms and conditions.
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Perenna Bank PLC is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority under registration number 956138. Perenna Bank PLC is a company registered in England and Wales with company number 13084174. Our registered office is at 20 Eastbourne Terrace, London W2 6LG
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