Mortgages for Older Borrowers
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Older Borrower Mortgages
Kwasi Yeboah talks all about mortgages for older borrowers.
How do I better my chances of securing a mortgage as an older borrower?
A lot of the ways that you would look to improve your chances of getting a mortgage as an older borrower are pretty much the same as if you were a younger borrower. Lenders want to see that you have got a clean credit credit report; are on the electoral register and are able to evidence that you have got an income and a strategy for keeping up with your mortgage payments.
Can you get a mortgage after you retire?
Yes, it is absolutely possible, the key thing is it depends on how you intend to repay the mortgage. If you take a repayment mortgage after you retire, your retirement income will need to meet the lender’s affordability.
If you’re looking at a residential interest-only mortgage, which is not that common but absolutely possible, you will still need to evidence to a lender that you have a repayment strategy at the end of the term. This could be as simple as stating that you intend to sell the property and downsizing. It could be a pension statement showing that you have got the savings to repay the loan at the end of the term.
What is the age limit for getting a mortgage?
In most cases, lenders will not have a maximum age for when you’re able to take out a mortgage, but they will have a maximum age you can be at the end of the mortgage term. For most lenders this is 70 years old, but there are a handful of lenders who are comfortable going up to age 75, and a smaller group still who will lend up to age eighty and above. As the maximum age limit increases, the pool of lenders decreases.
You could theoretically take a mortgage at sixty-five, but most lenders would not be comfortable lending to you for more than five years. Working with a mortgage broker like ourselves at First Thought would take all the stress of finding out which lenders would have longer terms to older ages so feel free to get in touch with us if you have any questions.
Can I get a 30 year mortgage at age 55?
It’s going to be quite tricky, but there might be one or two who will consider this. They will have quite clear requirements on evidence and income and how you are going to afford it throughout that term. One of the other products that will probably be helpful are later life, or Equity Release products.
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Can I get a mortgage at 60?
You can get conventional mortgages at the age of 60, you just have to be aware of that maximum age for the term to have ended. Lifetime Mortgages and Equity Release products are slightly different to conventional mortgages, but they tend to provide a loan until the age that you move into care or pass away, so you don’t have to repay them in the same sense.
There are two types of Equity Release products, Lifetime Mortgages and Home Reversion Plans. The former is a lot more common, and equity release providers will effectively loan you the money to do whatever you like with, on the condition that when you die or move into long-term care, they’re able to claim back their loan with interest from the sale of your home
The interest is typically rolled up, which is one of the key differences from a conventional mortgage. You have to be over the age of fifty-five to look at Lifetime Mortgages and the same applies for a Home Reversion Plan.
With a Home Reversion Plan it isn’t really a mortgage in any sense of the term, because you’re not being lent money. You are effectively selling a share of your house (up to 100% of it) to the Home Reversion provider. You get to live in the property until you die or you move into long-term care, at which point, the share of the remaining percentage in the property is divided up between the former homeowner and the home reversion plan provider.
I would always recommend trying to get a conventional mortgage where possible first and foremost if it’s appropriate, before considering Equity Release products.
Equity release will reduce the value of your estate and can affect your eligibility for means tested benefits.
Why can it be harder to get a mortgage when you are older?
One of the barriers is typically income. A retiree may not have the sort of income that they might have had whilst working, and that can have an impact. On affordability lenders might not be as comfortable lending you the same amount as when you were working.
The bigger issue when you’re looking at conventional mortgages is the term. The monthly payments tend to be higher depending on how much you’re borrowing, but if you’re borrowing £100,000 over a ten year term, your monthly repayments would be much lower than if you’re borrowing that figure over a five year term.
Which lenders lend to older borrowers?
There are a number of lenders who are comfortable and well known for lending to older borrowers. One of the benefits of working with a Mortgage Broker is that we offer additional information on some of the products that are available through lenders that are available regardless of age.
It can be a lot of work, there are a whole host of lenders and often clients have no idea what is available in the wider market that might be appropriate for them. One of the key benefits of working with a mortgage broker, like ourselves, is that we’ve got the expertise and the relationships with the lenders. We’re a whole-of-market broker as well, so if we can’t find you a product, then it’s unlikely anyone can.
Here at First Thought Financial Services we provide fee-free advice on mortgages, so it’s not going to cost you anything to ask us a few questions. Feel free to get in touch.
Think carefully before securing other debts against your home.Your property may be repossessed if you do not keep up with your mortgage repayments.
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