Maximum Age for Mortgage Lending
How to get a mortgage if you're at or you're nearing retirement age
The older you get, the harder it is to get a mortgage. But it's not impossible.
As you near retirement age, you might find that mortgage lenders are less willing to lend to you. This is because lenders consider older borrowers high risk, and so, once you reach 50, your options begin to change. However, in today's world, people are living much longer, and as a result, we've been seeing many more options becoming available on the market.
As a highly skilled and experienced mortgage broker, The Lending Channel has extensive expertise in specialist mortgages for over 50s. If you have any questions about lending later in life, we're here to guide you through it.
Keep reading to find out more.
Why does age impact mortgage eligibility?
Lenders might impose an upper age limit because, typically, older borrowers are considered more "high risk".
As we grow older, our personal circumstances change. We're more likely to develop health problems or die and be unable to pay the loan amount back altogether.
Additionally, large sums of money that would feasibly need decades to pay back won't be granted to someone approaching retirement age because retirement income is generally much lower than a working wage.
Lenders know this and might be wary of lending to you if your income is going to be significantly diminished in the near future.
What are the maximum age limits on getting a mortgage?
Although there is no "official" age limit on applying for a mortgage, some individual lenders impose their own age limit on who they're willing to borrow to.
Some typical age limits include:
- You must be between 65 to 80 when you take the mortgage out
- You must have paid the outstanding balance by the time you reach 70 to 95
So although you might be accepted for a loan, your mortgage term will typically be shorter, meaning your monthly repayments will be much higher.
However, we've seen many exceptions for complex mortgages - each lender will go by their own eligibility criteria, and we can speak to them directly about your specific circumstances. You might even find specialist lenders who focus on retirement mortgages.
How do I get a mortgage after I retire?
If you want to give yourself the best chance of success, the following will help:
- A good chunk of savings for a decent deposit
- Great credit history
- Already owning one or more properties - this will allow you to release some equity on your home through a lifetime mortgage
- Proof of any ongoing income
- A solid and demonstrable plan for paying back the outstanding amount
- A proven track record for paying back all bills in a timely fashion
How much can you borrow when you're over 50?
At 50, it's likely you're still years away from retirement, so you'll still have many options. In fact, many lenders will still offer the standard term of 25 years to you at 50. Competitive interest rates should also still be available to you from most lenders.
The amount you'll be able to borrow will depend entirely on your financial circumstances. Lenders will look carefully at your income, outgoings and credit history. Once they've evaluated your financial situation, they'll come back to you with an offer.
If you're over 60, your options will narrow. You'll be asked to provide evidence that your pension or retirement plan will be able to cover the monthly repayments, and you might be offered a reduced term of around 10-15 years. Older borrowers could face even tighter restrictions, with much shorter terms and higher deposits.
Ultimately, the older you get, the harder it is to find an appropriate mortgage deal. When considering your options, it's always advised to consult a professional mortgage broker, like The Lending Channel. We can help you borrow money safely, help you with the mortgage application and find the right mortgage provider for you with little stress.
What is a lifetime mortgage?
If you're having trouble being accepted for a mortgage, or you've done the mortgage calculations and the mortgage repayments are simply too high, you could consider a lifetime mortgage.
A lifetime mortgage is a method of equity release on your property. It's a lump sum, so there are no regular monthly payments. However, it's important to bear in mind that this might affect your suitability for certain benefits and affect the value of your estate when you die. Lifetime mortgages are only available if you're aged 80 or over.
Alternatively, some lenders offer a retirement interest-only mortgage - which means you'll only pay the interest rate on your loan, decreasing your monthly repayments significantly.
If you're considering applying for a mortgage as an older borrower, get in touch with our mortgage team today for some free, no-obligation advice.
We'll discuss your specific circumstances and get to know your requirements, allowing us to utilise our connections to find the best mortgage deal for you.