There are lots of reasons why you may be looking to secure a mortgage as an older borrower, or even into retirement.
Your existing mortgage may be coming to the end of its term with no repayment vehicle, and equity release may not be the right choice for you. You might want to move home or consolidate debts so you may want to secure funds beyond your retirement date.
You may even want to use funds tied up in your home to buy a holiday home, help your children get on the property ladder by gifting a deposit, to generate additional retirement income or even for significant home improvements.
Whatever the reason, pensioner mortgages or lifetime mortgages could be the right solution for your life plans, providing you with a tax-free lump sum.
What age is considered ‘older’ when applying for a mortgage?
You can expect upper age limits stipulated by mortgage lenders to be anything from 70 to 95.
If you’re in your 50s, it’s generally easy to find an appropriate mortgage deal, provided your finances are in order and other aspects of your application are favourable.
By the time you reach 60, the checks may be more intensive, with many lenders wanting to see evidence that your savings and pensions will be adequate to cover the proposed monthly repayments once you reach retirement age. Mortgage terms offered may be shorter and rates less competitive which can impact your affordability.
At 70, expect the choice to be even more restricted, with fewer lenders and even shorter terms – five to fifteen years – and higher mortgage interest rates to mitigate the risks.
If equity release does not suit your future plans, then a retirement mortgage could be the solution. At Mortgage360, we have access to mortgage providers who take a flexible approach to affordability, taking into consideration pension, rental and investment incomes.
Even if you’re already retired or approaching retirement, at Mortgage360 we can help you secure the right mortgage for older borrowers well beyond the age of 60.
Older borrowers’ mortgage options have changed since the Mortgage Market Review in 2014, with lenders becoming increasingly strict in terms of their lending assessments and criteria.
As a result, although there is still no official age limit in terms of securing a mortgage offer, more lenders do have upper age limits and term lengths for older borrowers. However, this doesn’t mean you can’t secure a deal, and we can help you through the process.
What is generally the oldest age you can get a mortgage?
Most articles written on the subject suggest 95 as the upper limit, although there is no official figure across the board. Lending caps can and will affect the length of your mortgage term, so the older you are, the shorter the term of the mortgage is likely to be, and the higher the interest rates, to mitigate the risk of lending to an older borrower. It’s important to access specialist mortgage advice.
What is a later-life mortgage?
Later-life, or a Lifetime Mortgage are designed for the over 55s approaching retirement age. They provide you with a number of options:-
- You can pay interest monthly, so the capital sum owing remains the same
- You can make no payments at all, so the interest is added to the loan and the total sum owing increases each year
- You can choose to make payments every month or even every year, usually between 1-10% of the total sum owing
What type of mortgages can older borrowers get?
Older borrowers have lots of options, although it may be necessary to look at more specialist products on the market to secure the most suitable deals from mortgage lenders.
- Equity release – homeowners aged 55 and over releasing equity in the form of tax-free cash from the value of their home, based on age and property value – either a cash lump sum or more regular payments.
- Lifetime mortgage – a little like equity release, an interest-only loan where you have a range of options in terms of repaying the interest accruing.
- Home reversion plan – selling all or a percentage of your property in return for a lump sum or regular payments, with the right to continue to live in your home until you die or move into long-term care.
- Retirement interest-only mortgage (RIO) – here, the capital is paid off when you die or move into long-term care, with any residual funds going to your beneficiaries.
- Guarantor or ‘family assisted’ mortgage – to help your children secure a mortgage and get on the property ladder.
Can I get a Pensioner Mortgage?
There are a number of specialist lenders offering mortgages for older borrowers tailored specifically for pensioners. The age limit is usually quite flexible.
As eligibility criteria, most lenders will want proof of your pension and monthly income to show you can afford the mortgage payments, and you will also be expected to have a good credit history to get a mortgage.
At Mortgage360, we can take care of everything for you. Call us for a friendly chat!
How can I improve my chance of getting a mortgage as an older borrower?
There are a number of things you can do to optimise getting a mortgage.
- Ensure you have a strong credit report – check it’s correct and always pay your bills on time, your credit rating is important
- Obtain proof of your pension income from your pension provider, any regular income and expected retirement income to demonstrate you can cover the mortgage repayments
- For the affordability assessment, cut out all unnecessary expenditures to reduce your monthly outgoings
- Don’t take out any new loans close to the date of your application – if possible pay off outstanding loans where you can
- The more substantial deposit you have, the more favourably you will be viewed when getting a mortgage as an older person
It’s important to be able to demonstrate that you are financially responsible with a stable income. Talk to Mortgage360, as a specialist mortgage broker to help you through the entire process.
How is borrowing for older people assessed?
The older you are, the more strict the assessment and the mortgage lending criteria, with a shorter mortgage term and higher interest rates a possibility.
Are mortgage rates any different for older borrowers?
Mortgage providers base their rates on perceived risk – older borrowers are seen as a riskier prospect than younger borrowers, therefore expect interest rates to be higher, as well as Loan to Value caps.
What factors affect the interest rate you will be offered?
Primarily your financial circumstances. A larger deposit will impact positively the interest rate offered, and shorter mortgage terms are also a cheaper option.
Why older borrowers should use Mortgage360?
At Mortgage360, we welcome older borrowers and provide help and assistance with mortgage applications, from moving home to remortgaging through to retirement interest-only mortgages. We provide tailored mortgage advice to fit your own personal circumstances and objectives.
Contact us today to start the ball rolling!
Equity Release services are referred to a third party.
Neither Mortgage360 nor PRIMIS are responsible for the service received.