Our Lenders
We work with trusted brokers to give you access to a panel of leading lenders well placed to meet your needs.
If you are on your pension, you might be wondering whether you will be eligible to take out a personal loan. This guide explains how to get a loan as a pensioner, as well as outlining some pros and cons of the process.
Can I Get a Personal Loan if I Am Living off a Pension?
Yes. Your lender will take your pension income into consideration as well as any income you make from part-time jobs and rent, if you are charging rent to any tenants. All of this will be taken into consideration along with your credit score.
Your lender may have a minimum pension income requirement to be eligible for their loans. Different providers will have different minimum requirements, so it is important to have a look around to get the most suitable deal.
There is often a maximum age limit on personal loans, however. For example, you may notice that your provider requires you to be 75 years old by the end of the loan. It is possible that this final age may be lower, but it is rarely higher. This is because loans become riskier the older a borrower gets, because there is a chance they may never get the opportunity to pay it off.
What Do I Need to Apply for a Personal Loan, as a Pensioner?
You will need to provide lenders some evidence of your income, and potentially any outgoings and debt commitments. This may include a mortgage, for example.
Your lender will carry out a credit check to get an idea of your credit history. This is why it is recommended that you spend some time ensuring that you have been paying off your debts, such as your credit cards, for at least 6 months before making a loan application.
Your lender will also likely want to have an idea of what you want to use the loan for.
Can I Get a Mortgage if I Am a Pensioner?
Regardless of your pension, it can be difficult to get a mortgage over the age of 60. This is because a lot of lenders have upper age limits of 70 or 75, meaning you will need to commit to clearing the mortgage before you reach that age. This can be very difficult, depending on your circumstances.
Your lender will want to make sure that this loan is affordable to you. To do this, they will run a full financial check and credit check before they approve your mortgage.
How Much Can I Borrow if I’m a Pensioner?
This depends on an array of factors such as:
- Your age (the lower the better)
- Your income (the higher the better)
- Your outgoings (the lower the better)
- Your credit rating (the higher the better)
However, make sure you never borrow more than you absolutely need, and double check beforehand whether you can afford the repayments, which will include interest and any fees.
Can I Borrow Against My Pension?
Yes, you can take out a pension loan. This is a type of loan that is secured against the value of assets in your pension fund, similar to a secured loan.
However, there are many costs involved with this sort of loan, and it can end up being difficult to pay back. If you want to take out a pension loan, do your research to be absolutely sure that this is the right choice for you.
Can I Get a Loan With Bad Credit, as a Pensioner?
Yes, but it is going to be difficult. There are some specialist lenders who offer loans to people with low credit scores, who may have dealt with debt in the past. It is better to take steps to improve your credit score before you apply for any loans.
What Happens to My Loan When I Die?
If you have not repaid your loan by the time you pass away, it still needs to be paid off. If your loan is a joint loan, the other loan holder will continue to pay the debt alone.
However, if you took out the loan on your own, the debt will be taken from your estate, which includes your total cash and assets.
What Are the Pros of Getting a Loan in Retirement?
Getting a personal loan in your later years can give you some cash to enjoy your retirement, or to manage necessities such as medical bills, car repairs, or boiler replacements.
These loans are repaid in fixed monthly installments, making budgeting easier. There is no option to delay the payments or to borrow more, as you could with a credit card, which makes it less likely that you will fall into a debt spiral.
What Are the Cons of Getting a Loan in Retirement?
You must pay interest on any loan, as well as additional fees. This makes taking out a loan more expensive than simply saving up or asking friends for money. Additionally, these charges could add up, and potentially become unmanageable. If you miss a payment, you may end up taking a hit to your credit score.
Finally, if you pass away without paying your debts, your lenders will take the outstanding amount from your total estate. This means your beneficiaries get less inheritance.