Can I get a secured loan if I'm retired?

Yes, you can get a secured loan if you’re retired - as long as you meet the lender’s criteria. For example, you’ll need to have an asset that you can use as collateral, and enough money coming in to cover the monthly loan repayments.

5 min read
retired couple on laptop

What are lenders looking for? 

 Lenders look for customers who:  

  • Have a steady income (e.g. pension) and can comfortably afford the repayments 
  • Are below a certain age (check if there are any age restrictions before you apply)  
  • Have equity in their asset (e.g. house or car, depending on the lender) 

Equity is the difference between the current value of your asset (e.g. your house) and the outstanding balance (e.g. your mortgage). The more equity you have, the higher your chances of getting approved a secured loan, as lenders should see you as low-risk. 

Bear in mind though, if you secure your loan against your property and you fall behind with your loan repayments, the lender could repossess your house to claw back owed funds.  Your income will play a big part in whether you’ll be approved, and how much you can borrow.  

The more money you have coming in from your pension each month, and the more equity you have, the more you may be able to borrow with a secured loan. 

What reasons can retirees get a secured loan for? 

Retirees can get a secured loan for any reason (other than gambling or anything illegal). Common reasons include:  

How much are you looking to borrow? 

With a secured loan from Ocean, you can borrow anything from around £10,000 to £100,000.  

If you have a bad credit history, you may find it easier to get approved for a secured loan than a personal. This is because the lender can repossess the asset the loan is tied to if you fall behind with your repayments. This gives them more comfort to lend to those with less-than-perfect credit scores.  

It’s important that you only borrow money if you need it and have room in your budget to meet the monthly repayments on time, every time. Otherwise, you could put your asset at risk. 

Remember, if you consolidate your existing borrowing, you may be extending the term and increasing the amount you repay in total.

Budgeting for repayments? 

Your monthly pension should cover all your priority bills (such as council tax and utilities for example). The money that’s left over can be spent however you like, but there needs to be a decent sum spare if you want to get a loan.  

Lenders will compare your monthly income and outgoings to see if you can comfortably afford a loan on top. So, before you apply, it’s worth doing some calculations of your own to find out how much you’d need to pay each month towards a loan. You can use this loans calculator to help you work it out. 

What lending options are available later in life? 

Although you may find it more difficult to get a loan later in life, there are still options available. Each lender uses their own eligibility criteria, and some are more lenient than others.  

To help you weigh up your options, here are some alternative forms of borrowing for retirees: 

1. Mortgage loan 

You could consider remortgaging your current property to raise extra funds. You can either stick with your current mortgage provider or switch lenders. Either way, you’ll replace your old mortgage with a new one in order to borrow more money. 

Bear in mind that your mortgage payments and the length of your agreement are likely to increase. Your lender will run a credit check and review your income and outgoings to make sure you’re a reliable borrower and the monthly repayments are affordable. 

Eligibility criteria vary from one lender to another, so it’s best to check the terms and conditions before signing up. Some require your mortgage term to start and end before you reach a certain age. 

Read on to find out more about the remortgaging process from start to finish. 

2. Home equity loan 

If you’re a homeowner and are 55 years old or over, a home equity loan could be for you. You could look to borrow against the equity in your property (i.e. the amount you own outright) and put the cash towards something else. 

There are two main options: 

Lifetime mortgage  

With a lifetime mortgage, the loan is secured against the equity in your home. However, it doesn’t need to be repaid until you have passed away or moved into full-time care. The lender may sell your house in the future to cover this. In the meantime, you can continue to live in your home without paying a penny. (Although some lifetime mortgage providers require you to pay the interest only). 

Home reversion

With home reversion, you sell a share of your home to a reversion provider. You’ll get cash in return for this, sometimes in monthly instalments or as a lump sum. You’ll live rent-free but must take responsibility for looking after the property and make sure it’s properly insured.  

Tip: If you’re thinking about going down the route of getting a home equity loan, we’d recommend speaking to an independent financial advisor first. They’ll be able to help you make an informed decision based on your individual circumstances.

3. Personal loan  

If you have a good credit history, a personal loan may be suitable for you. Like a secured loan, you agree to pay back fixed monthly payments over a set period. However, they tend to be for lower sums of money with higher interest rates - typically under £10,000. 

Personal loans are unsecured, which means your home is not at risk if you fall behind on repayments. But your credit score will be affected if you don’t pay on time, and extra interest and charges may apply. 

4. Credit card  

For relatively small-scale borrowing (like £1,000 to £3,000), you could consider a credit card. For example, a 0% credit card comes with an interest-free introductory offer for a set period of time. Effectively, it’s like taking out a loan, but you don’t pay any interest until the promotional deal ends.  

Bear in mind, you’ll usually need a good credit score to get the most competitive deals. Once the introductory period finishes, you’ll pay the lender’s standard rate, so make sure you clear the balance before this happens.  

Secured Loans from £10,000 to £100,000

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We have found loans with rates from 2.10% to 25.34% APRC, which has allowed us to help customers with a range of credit profiles. Representative Example: If you borrow £20,000 over 10 years, initially on a fixed rate for 5 years at 5.35% and for the remaining 5 years on the lender's standard variable rate of 6.15%, you would make 60 monthly payments of £247.79 and 60 monthly payments of £252.62. The total amount of credit is £22,995; the total repayable would be £30,119.60 (this includes a Lender fee of £595, a Broker fee of £2,400 and a Lender exit fee of £95). The overall cost for comparison is 9.1% APRC representative. This means 51% or more of customers receive this rate or better.