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Loans for pensioners

Loans for pensioners

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Last updated: 05 January 2023

They say life begins at 60, and many of us are just getting started with our plans by the time we hit retirement. Retiring from work means more free time, but it also means your steady income will generally be reduced. So what should you do if you need to access a loan, in order to afford a lump sum payment. In this guide we'll run you through some of your options if you're looking to get a loan as a retiree.

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Can I get a loan if I'm retired?

The good news is yes, you can still get a loan when you're retired. The criteria for the loan might be slightly more strict, for example there could be limits on the time frame you can borrow for, or a cap on the amount you can borrow unsecured.

Lenders will consider a range of variables, such as:

Your age

Many lenders will set an age cap on their loans, for example that the terms of the loan will only run until your 75th birthday. This is to protect themselves from lost repayments further down the line.

Your assets

Lenders are more likely to loan to you if you own valuable assets that can be assured against the loan, such as property or stocks. This is because the lender will be able to reclaim the retirement loans from these assets in the event of missed repayments.

Your income

Lenders will scrutinise your ongoing income, from pensions or part time work, when considering the risk of lending to you once you've retired from full time work.

You should consider all of these variables when you compare loans, as lenders very rarely loan to customers who seem unlikely to continue to meet their repayments, and being rejected for a loan will be listed on your credit file. You can start comparing personal loans with our comparison tool today.

What types of loans for pensioners are available?

There are a few options if you wish to take out a retirement loan, as there is with any loan. Generally the most common loan types are unsecured. This means that no assets are secured against the loan, but generally means the amount you can borrow will be low to medium, and repayments will be subject to a fairly high interest rate.

If you own high value assets such as property, you may be interested in taking out a secured loan. This will allow you to secure the loan against your asset, often reducing the interest rates and monthly repayments. The risk with these types of loan is that missing repayments leaves you liable to have your asset seized. For this reason, secured loans are by no means risk free, and this should be taken into consideration when running a loan comparison, as cheaper today isn't always cheaper tomorrow.

If you have plenty of equity in your property you can also remortgage in order to secure a loan. This may be a good option for equity rich but income poor applicants, although you'll still have to prove your income is sufficient to meet the repayments.

What's the best type of loan for pensioners?

That's entirely dependent on your personal situation. For the most part with loans for pensioners the best option is the one you're fully capable of repaying, in full and on time. The risk of losing assets secured on a loan, or of building up debt which could be reclaimed or passed on to your spouse or children is something to be wary of.

Alternatives to taking out a loan

There are a few alternatives for those looking for retirement loans to consider.

Credit cards

Many credit card companies offer 0% interest for a number of years, so borrowing on a credit card could be the cheapest way to loan small amounts of money, so long as you make all your repayments on time.

Credit unions

A credit union is a small, community focused lender. They may be able to help when your credit history is preventing you from getting a loan with a major bank.

Equity release loans

A loan against the value of your property. The loan is added onto your mortgage and the interest continues to compound the longer you continue without repayments. These types of loans can become very expensive, and can negatively affect the inheritance of your family, so they should be researched thoroughly before being considered.

How do I apply for a loan?

You can use our handy loan comparison tool to browse different types of loans for pensioners. We will compare all sorts of providers to find you great deals for raising cash, whatever your age!


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Michael Quinn

Author: Michael Quinn

Michael is a dedicated author helping usave to write guides, blogs and news for the last four years. When not writing articles, you can usually find him at wine tasting events or having a political debate on the night tube.

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