Mortgages for Older Borrowers

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Mortgages for Older Borrowers

Mark from Total Home Loans joins the Mortgage and Protection podcast to discuss mortgages for older borrowers. 

How do I improve my chances of securing a mortgage as an older borrower? 

There are two important things to look at:

  1. Outstanding debt. Unsecured debt such as loans and debts on credit cards are seen with more negativity as you get older, and may affect whether you are accepted for a mortgage. 
  1. Steady Income. At any age, lenders want to see that you have a steady flow of income, which means it will be easy for you to repay the loan. If you have fluctuating income it can be more difficult to get a mortgage.
  1. Deposit. The more deposit you can put down, the better. With a lot of mortgages, younger borrowers are able to get up to 90% Loan to Value – which means a 10% deposit. But an older borrower could be looking at a maximum of 75% or 80%, meaning you could need a 25% deposit. A higher deposit means lower monthly payments and better interest rates. 

Can I get a mortgage after I retire?

Yes, but it very much depends on your income. Obviously, when you retire, there’s no more working income coming in, but you could still be receiving a steady amount from private or state pensions. 

Some lenders will consider state benefits if they’re going to continue, like PIP or DLA. And also many people have rental properties that generate income and lenders will also accept this in a mortgage application. 

Should I use equity release now?

Equity release is very useful for certain people and is growing in popularity. It’s a way of releasing the money you have invested in your home to pay you a lump sum, and means you don’t have to sell your property to access the funds. 

It is a specialist area so you need to speak to a fully qualified Equity Release adviser about it, which we can refer you to outside of Total Home Loans. 

One thing to be aware of is that you use equity release very quickly. If you choose not to make any repayments, you will eat into equity fast. While it’s a useful tool, there are plenty of other schemes to consider alongside equity release.

Equity Release will reduce the value of your estate and can affect your eligibility for means tested benefits.

What is the age limit for getting a mortgage? 

There isn’t an official age limit, and there are lenders that have become specialised in mortgages for older borrowers. Quite a few well-known lenders now have no age limit whatsoever. Finding them just means talking to a mortgage advisor.

What is a lifetime mortgage? 

Some lenders offer a lifetime mortgage, which is an interest-only product. When you make a monthly payment, it doesn’t pay off any of the sum you originally borrowed. It’s just paying the interest on your loan. As an example, if you borrow £50,000 on interest-only, at the end of your 20-year or 30-year mortgage term, you’ll still owe that £50,000.

With a lifetime product, therefore, your mortgage will be paid off when you die through the sale of the property. Or, if you’ve left the property to a relative, they can remortgage it to pay off the debt. 

Speak To An Expert

Total Home Loans are a national mortgage broker with whole of market access. Their combined experience of over 50 years in the mortgage and financial services industry means they have an enviable reputation and one which makes them well-placed to find the most suitable mortgage solution for you.

Can I get a 30 year mortgage at age 55? 

With some lenders there is no age limit at all. So you can have a 30 year mortgage at age 55, 65, even 75. Different lenders have their own approach, so go and see a broker, get good advice and they’ll find you an appropriate mortgage product.

Why can it be harder to get a mortgage when you are older?

There are two elements to this. First, the Financial Conduct Authority, the governing body for mortgages, sees older people as more vulnerable. Because of this, the rules are more stringent, and brokers and advisors are required to make sure that you are well looked after as an older customer. 

The second reason is that your income generally lowers as you get older.

Which lenders lend to older borrowers? 

Probably about a quarter of the market will accept older borrowers, but they lend in different ways. Most lenders stop lending at the age of 70 or 75. Other specialist lenders and some high street banks and building societies don’t set a limit – they will look at each case on its merit. It really does pay to speak to a broker that can sort through all the options for you.

What types of mortgages can I get as an older borrower?

All mortgage types are available: fixed, trackers, offset, cashback, stepped. You have access to the same mortgage products as a younger borrower. 

How can a mortgage broker help older borrowers?

We will take all your information, your personal circumstances, where your income comes from and what you want to achieve. Brokers are worth their weight in gold – we explore all your details, give you advice, help you go to a lender that will suit you best and advise on the most suitable products for your circumstances.

Borrowing is completely possible for older borrowers. The lenders are there for you, so speak to a broker. We are here to help. There are plenty of options available to borrow when you’re older.

Think carefully before securing your debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.

Why Total Home Loans?