If you are already retired, a lender will usually look at the income you actually receive: your state pension, any workplace or private pensions in payment, and other regular income such as investments or rental income. This is generally simpler to evidence than income that has not started yet, but adverse credit is still assessed in full alongside it.
This page goes further than our main later-life remortgage with bad credit page on the detail that matters once you have already stopped working: which pension income counts, how several smaller pensions are combined, and how means-tested benefits fit into the picture.
On this page
This page covers
- Employment
- RetiredPension income, your age and the mortgage term all shape what lenders may consider.
Read the main guide: Remortgaging in later life with bad credit
In short
- Lenders usually look at pension income already in payment, evidenced with recent statements.
- Several smaller pensions, such as a state pension plus a small workplace pension, can usually be added together.
- Means-tested benefits are assessed differently from pension income, and not every lender counts them the same way.
- A long, settled mortgage history can help offset older credit problems once you are retired.
What income do lenders look at once you are retired?
Once you have stopped working, a lender generally assesses what you actually receive rather than a forecast. This usually means your state pension, any workplace or private pension already in payment, and other regular income such as savings interest, dividends or rental income. Evidence is normally recent bank statements or pension provider letters showing the income arriving regularly.
This is often more straightforward to evidence than a forecast for someone still working, because the amounts are already known rather than projected.
Can several smaller pensions be combined?
Often, yes. Many retired homeowners have more than one source, such as a state pension alongside one or more small workplace pensions built up over a career. Lenders generally add these together to reach a total income figure, provided each is evidenced with its own statement.
- State pension, evidenced with a recent DWP letter or bank statement showing payments
- Workplace or private pension income, evidenced with statements from each provider
- Any pension lump sum already received and how it has been used or invested
- Other regular income, such as savings interest, dividends or rental income, with statements
If a pension has recently started, or an amount has changed, keep the paperwork explaining why, since a lender may query a figure that does not match an earlier statement.
How do means-tested benefits fit into affordability?
Some retired homeowners receive means-tested support such as Pension Credit alongside their pension income. Lenders vary in whether and how they count this: some may include certain benefits as income, others may not, and rules can differ between lenders. Check current guidance on GOV.UK and ask an adviser how a specific lender treats it, rather than assuming it will count in the same way as a pension.
Because borrowing more can sometimes affect entitlement to means-tested benefits, it is worth checking this before deciding to raise extra money through a remortgage.
How does bad credit fit alongside retirement income?
Bad credit is weighed the same way whatever your income source: how recent and serious the problems are, whether they are settled, and how they sit alongside your equity. What changes once you are retired is that age already limits which lenders are in the running, so a credit problem removes options from an already smaller pool. See our page on remortgaging with a low credit score for how an overall poor file, rather than one specific entry, is generally viewed.
A long, settled mortgage history is often in your favour here. Many retired homeowners have paid a mortgage for decades, and a clean recent record can help even alongside older defaults or CCJs.
What if a standard remortgage is not the right fit?
If your income or credit history make a standard remortgage difficult, it is worth comparing the alternatives before ruling anything in or out.
- A product transfer with your current lender, which may not need a full affordability check if you are not borrowing more
- A retirement interest-only mortgage, which is assessed against the interest only, not a full repayment
- Getting free advice from MoneyHelper if you are unsure which route fits your income
Some retired homeowners consider a lifetime mortgage instead. It is a different, specialist product that can reduce what you leave to your family and needs its own regulated advice. We do not recommend it over a standard remortgage.
What may affect a remortgage once you are already retired
| Factor | Why it matters |
|---|---|
| Pension income already in payment | Assessed on what you actually receive, evidenced with recent statements. |
| Number of pension sources | Several smaller pensions can usually be combined into one income figure. |
| Means-tested benefits | Counted differently by different lenders, so check before assuming they will be included. |
| Age at the end of the term | Each lender sets its own maximum, which can shorten how long a new term can run. |
| Type and age of credit issues | Recent or unresolved problems narrow an already smaller pool of lenders willing to lend by age. |
| Mortgage payment history | A long, clean recent record can help, even where older problems appear on your file. |
| Equity and loan to value | A lower LTV generally widens options, and many retired homeowners have significant equity. |
| Other regular income | Savings interest, dividends or rental income can add to your pension income figure. |
These are general points, not lender rules. Each lender sets and changes its own criteria.
Information an adviser may ask for
You don’t need all of this to make an enquiry. It helps to know where to find it, because an adviser is likely to ask about most of it.
- Recent statements for your state pension and any workplace or private pensions
- Evidence of other income, such as savings interest, dividends or rental income
- Details of any means-tested benefits you receive
- Your mortgage balance, deal end date and any early repayment charges
- Your credit reports from Experian, Equifax and TransUnion
- Details of any CCJs, defaults or arrears, with dates
- An estimate of your property’s value
Frequently asked questions
Do lenders use my state pension as income?
Yes, most lenders count the state pension as income, usually evidenced with a recent DWP letter or bank statement showing the payments. It is normally added to any workplace or private pension you receive.
Can I combine several small pensions to qualify?
Often, yes. Lenders generally add together pension income from different sources, such as a state pension plus one or more workplace pensions, provided each is evidenced with its own statement.
Will Pension Credit or other benefits count towards affordability?
It depends on the lender. Some count certain means-tested benefits as income, others do not. Check current rules on GOV.UK and ask an adviser how a specific lender treats your benefits before assuming they will be included.
Does being retired make bad credit harder to overlook?
Age already narrows which lenders are in the running, so a credit problem removes options from a smaller pool than for a younger applicant. It does not necessarily rule out every lender, particularly if the problem is older or settled.
Is a standard remortgage still possible if I only have a state pension?
It can be, depending on the amount you want to borrow and your other circumstances, but a state pension alone is often a modest income. An adviser can check whether the borrowing you want is realistic, or whether a smaller amount or a different product may suit better.