Why do age limits exist for mortgages? Mortgage lending revenue comes from interest generated throughout the full term, an average of 25 years. Mortgage lenders impose maximum age limits due to life expectancy concerns and post-retirement affordability, and they’re usually not willing to make exceptions.
Even if you’re at your retirement age, it’s not impossible to get a mortgage product. Working with us will be easier than if you went the mainstream route because here at When The Bank Says No, we have a network of specialist lenders specifically for older borrowers.
Read on below to find out how you can get your dream home at any age.
What’s the current age limit for a mortgage in the UK?
There is no uniformly set upper age limit for mortgage applications, it depends on the individual mortgage lending company. That being said, an age limit is split between two categories:
- Application maximum age limits – This describes the maximum age that you can submit a mortgage application, commonly between 65 and 80 years old.
- Repayment maximum age limits – The maximum age you can be when the mortgage ends is usually between 70 and 85 years old.
Your age will still be taken into account when making a new mortgage. But that doesn’t mean younger applicants have much of an advantage over you; it still mostly depends on your personal circumstances, income, etc.
What mortgages for over 50s are available?
If you’re over 50 and considering getting a mortgage, you are still in the safe zone. As we claimed before, the average mortgage term length for first-time buyers is 25 years. Many lenders will offer this with competitive interest rates.
However, some lenders may ask you to provide evidence of your predicted retirement outcome. If they come to believe your mortgage repayments will result in you stretching yourself thin, they may reject your mortgage application. If you already have a mortgage, think about settling your mortgage early or releasing equity to help.
What mortgages for over 60s are available?
Eligibility criteria begin to hem you in at this age range. Mortgage providers may still have offers with competitive interest rates, but the terms offered will likely be shorter, ranging from 10 to 20 years.
To qualify for a mortgage at this age, you’ll need to show evidence that your pension, annuities, or other investments can cover your mortgage repayments. Lenders will want to ensure you have a reliable source of income to cover your mortgage, or else you may have to opt for more niche lenders.
You can still consider options like equity release. However, due to age caps, don’t expect to get a mortgage with a standard term length. Some exceptions do exist, but it’s best to consult with a mortgage broker to have a clearer view of your options.
What mortgages for over-70s or 80s are available?
As you approach your 70s, few mainstream lenders will be willing to offer a mortgage to you. In addition, most lenders will likely limit the term to 15 years, making it less affordable.
Relying on mortgage brokers like us here at When The Bank Says No is probably your best bet when looking for a mortgage in your 70s and 80s.
What are some alternatives to traditional mortgages?
Applying for a mortgage as an older borrower comes with many challenges, from short-term lengths to fewer lenders willing to offer a mortgage. Fortunately, there are several later-life mortgage options you can choose from besides getting a traditional mortgage.
Equity release schemes (later life lending)
Equity release is a form of mortgage that allows older homeowners to borrow money against a home by taking out a tax-free lump sum, meaning this is for those already on the property ladder. You may choose between two types of equity release.
- Lifetime mortgage – This life lending option is reserved for those aged 55 or over. This allows you to borrow money against your home, which is then paid back through its sale. So, lifetime mortgages don’t require any monthly repayments, but interest still accrues over time.
- Home reversion – This later-life lending option is a type of equity release catering to homeowners over 65. It’s when you sell a part or all of your home to a reversion company for a tax-free cash lump sum or a regular income, though this process only happens after death or transferral to a care home. You will not have to pay rent in the meantime. Home reversion providers typically go for between 20% and 60% of the property’s market value.
Retirement interest-only (RIO) mortgages
A retirement interest-only mortgage is designed for older borrowers, usually over 55. Just like conventional interest-only mortgages, the borrower only needs to pay back the interest each month, not make payments on the capital amount like you would with traditional repayment mortgages.
Guarantor mortgages
Guarantor mortgages are another option if you’re a first-time home buyer and don’t have enough income to be granted a mortgage on your own. It involves applying with a guarantor, usually a family member or close friend, who will repay the loan if the borrower can’t do so.
Joint mortgage
Consider getting a joint mortgage with a younger relative. The presence of a second party means that you can extend your mortgage term and increase your borrowing power whilst sidestepping the upper age limit. Furthermore, this is a standard mortgage, meaning it doesn’t come with the catches so often present with niche lenders.
How can I increase my chances of getting a mortgage?
Regardless of your age, you need to prove to the lender that you’re a responsible borrower who’s capable of managing debt and making regular payments.
- Check your credit report for errors – Lenders check your credit report and use it to see if you qualify for a loan. In the UK, you can pay £2 to access your credit report online. It’s not uncommon at all for credit reports to have errors that bring the score down, especially if it hasn’t been checked for a long time. Once you find errors, call the credit agency so these can be corrected immediately.
- Consider making a larger down payment – If you have money saved up, you should consider laying down a large down payment. Doing so is a great way of showing your lender you’re a responsible saver. It also reduces the loan-to-value (LTV) ratio, which looks more appealing to lenders.
- Pay your bills on time – Ensure you’re paying your bills on time to keep missed-payment defaults from showing up on your credit file. Missed payments will stay on your file for at least a year and up to six years. Even missing one payment can make it harder for you to get a mortgage.
Conclusion
Applying for a mortgage in your later years may be challenging, but not impossible. Many lenders nowadays are offering options specifically designed for older borrowers, such as retirement interest-only mortgages.
You just need careful planning and a willingness to explore various options. Seeking expert advice will also go a long way to help you overcome the challenges of being an older borrower and find the best deal for you. Work with When The Bank Says No to help find the best mortgage deals for you.
FAQ – Is the process for applying for mortgages the same for over-50s?
No matter your age, the process for applying for mortgages is the same. However, when you’re nearing or at retirement age, your lender may ask for additional information like your pension forecasts.
Doing so helps them check if you’ll be able to pay back the mortgage when your regular monthly income stops.
FAQ – How can a mortgage advisor help me?
Mortgage advisors are experts in the different mortgages available on the market. They can show you your options when it comes to later-life mortgages and help you find the best one based on your unique circumstances.
Here at When the Bank Says No, our expert advisors can help you reach your goal of owning a home, even if you’ve had bad credit or mortgage problems in the past.
FAQ – Can I port my mortgage when I move houses?
When you move houses, you can take your mortgage with you. This is called “porting” your mortgage. If you do so, you’ll need to reapply because, technically, this is a new mortgage.
You can port your mortgage even if you’re over 50, but it may not be easy. You may be rejected if your lender has changed eligibility requirements or if your predicted retirement income is expected to decrease.
FAQ – Can I extend my mortgage term to lower monthly repayments in retirement?
Only in limited circumstances. You must provide sufficient evidence that your expected income via retirement income, pensions, annuities, investments, etc. will be more than enough to comfortably afford.
It may not be possible to extend your mortgage term if you’re close to the age limit. This is because most lenders will only allow you to do so until the upper age limits they’ve set.
FAQ – Can I get a mortgage if I have health problems?
Yes, you can still get a mortgage even with health problems. Your lender can’t discriminate against you based on your illness. As long as you can afford to make repayments, your application should not be rejected because of your health.
FAQ – Will I pay higher interest rates if I’m an older borrower?
Yes, there’s a chance you’ll be offered higher interest rates because you’re an older borrower. Lenders do so because they don’t want to take on too much risk when they lend to you. If you want the best deal possible, you should talk to a mortgage advisor.