Mortgages for over 50’s

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In recent years we are presented with more and more over 50’s mortgage borrowers looking for assistance.

Borrowers born in the 1950s, the 1960s, and now even the early 1970s, are increasingly concerned about their mortgage options and the limited mortgage terms being offered to them.

Why can mortgages for over 50’s be a problem?

Many mortgage lenders will not run a mortgage term beyond the applicant’s state retirement age (67).

For a 50-year-old this can mean a maximum term of under 17 years. A shorter mortgage term means higher monthly payments which can fall foul of lenders affordability calculations.

Example

A 50-year-old taking a £200,000 mortgage over a 16 year term with a good deposit may pay £1,200 a month.
A 40-year-old taking the same mortgage over 25 years would pay £850 per month.

What is the answer for the mature mortgage borrower?

The first thing that the older mortgage borrower needs to understand is that the response from their own bank or current lender is not the limit of what is available available on the market. Also there are many myths around mortgaging for the older borrower.

Below we outline some of the key myths against the realities of the market and how it may affect you.

Myth 1 – You cannot borrow beyond your normal retirement age

This is not the case, many lenders will lend beyond age 67 (state retirement age for the group we are discussing). Many mainstream mortgage lenders will go to age 70.

Myth 2 – I’m quite a bit older than my partner and the lender has to base maximum lending on my age

This is the case for many, but not all, mortgage lenders.

Some lenders will base the mortgage application on the age of the younger applicant if the old applicant’s income is not needed to support the affordability.

Myth 3 – As I’m in my 50s a new mortgage not be affordable

This is not necessarily the case, particularly with the unprecedented low rates available in today’s market. These, together with some excellent terms offered by a number of lenders mean that many of our applicants born in the 1960s and earlier can be accommodated

Myth 4 – You just can’t borrow into retirement

Yes you can. If you can evidence that your retirement income will be sufficient to support the mortgage lending, then mortgage terms can be available to age 85.

Myth 5 – I’m already retired so cannot get a mortgage

Yes you can. Applicants that are already retired can get lending up to age 85 provided their retirement income supports that lending.

Factors that assist the over 50s mortgage borrower

If you are currently in your 50s or 60s, or perhaps even your late 40s, there are a number of factors that may assist you in finding a wider range of options for your mortgage application.

Occupation

It is perfectly feasible for a lender to be comfortable with you working beyond state retirement age, but for some occupations this is not practical in the lenders view. For example and Accountant will readily be accepted by a lender as intending to work into their 70s. A bricklayer suggesting the same plan is likely to be refused.

Spouse

If your spouse or partner is younger than you, and their income is sufficient to support a mortgage lending, then some lenders will work on their age at application ignoring your own.

Substantial Pension planning

If you can evidence sufficient planning for a good income in retirement, lenders will consider this income to support a mortgage application and therefore offer you a longer term.

Modest pension planning

If you can evidence current contributions of any size to a pension, or an existing pension fund, some lenders will take this into account and allow lending to age 75, even though the projected pension is minimal.

What next?

If you were born in the 50s, 60s, or early 70s and need a mortgage or remortgage is well worth talking to a mortgage broker.

Most mortgage lenders do not look favourably on the borrower who needs a mortgage term beyond age 67 so you need to work with a mortgage broker who understands which lenders cater for this market.

In most cases, if your plan is practical, it can be considered.

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