For more information speak to one of our brokers
Find your local brokerThe mortgage application process is a series of hoops that you have to jump through. While our independent mortgage advisors are here to give you a ‘leg up’ to make the mortgage selection and application phases as smooth and stress-free as possible, being aware of the current lending criteria and your affected eligibility is crucial.
While your income and credit score can all be improved to boost your eligibility in the current market, there are certain factors that you simply can’t change – your age being one of them!
It’s a fact, once you hit 50 your mortgage options dwindle. But, is there an age limit when applying for a mortgage?
There’s no denying that the risk of defaulting on your mortgage increases with age. Whether you continue to work or choose to retire, lenders see your circumstances in later life as much less desirable. You may after all need to decrease your working hours due to health issues or may not even survive to see out your mortgage term! As a result, most lenders have their own age limits for later life lending.
As with any applicant, your eligibility for taking out a mortgage will be determined by your debt-to-income ratio (DTI). While younger borrowers will see their loan capped to 4- or 4.5-times their annual income by most lenders as a result, older borrowers are restricted further.
It’s not just the amount you borrow that will be impacted by your age, your mortgage term will also be shortened. An applicant who is aged 65 for example is unlikely to secure a mortgage deal that has a 25-, 30- or 35-year mortgage term.
With more people retiring later, many lenders have had to revisit their age limits. Halifax was just one of the mainstream lenders to make changes to their maximum working age policy and this is having a positive impact on later life lending.
An increasing number of UK lenders (especially building societies) are embracing no upper age limit at all. Mainstream banks however have strict limits. This is Money explains how these limits are impacting older lenders and their monthly mortgage costs:
“Barclays and RBS — which are among the worst for age restrictions — will let you borrow until age 70. This means for someone aged 55, the loan term will be 15 years at most, rather than 25. When you reduce the term, your monthly repayments rocket. On Barclays’s 1.35 per cent two-year fixed-rate deal, you’d pay £589 a month on a £150,000 mortgage over 25 years. Spread over just 15 years, the monthly repayments would shoot up to £921.”
Exploring your mortgage options is the key to making finance work for you in later life. Interest-only and equity release mortgages can offer lifelines for those looking to move up the property ladder after 50. You should also make sure your credit score is good. A larger deposit can open up more opportunities for older borrowers too.
Using a mortgage broker like us can help you get ahead, whatever your age. Contact us to discuss your over 50s mortgage options.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE. A typical fee is £295. Ask for a personalised illustration. The Mortgage Bureau is a trading name of A.M. Mortgages (UK) Ltd. Authorised and regulated by the Financial Conduct Authority. The Financial Conduct Authority does not regulate some aspects of Buy to Let mortgages.