Older Borrower Mortgages
Gary Farley talks all about mortgages for older borrowers.
How do I better my chance of securing a mortgage as an older borrower?
One of the main things is to always check your credit report before the lender does. It used to be that checking your credit report cost you, but nowadays you can do it for free, and the main ones are Experian and Equifax.
This can prepare you in the event that there have been any missed payments. If, for instance, you had a default that shouldn’t be there, you can challenge it and get it removed before you apply for a mortgage. You also need to check that you’re on the electoral register. Try to avoid applying for credit shortly before applying for a mortgage because it could hinder your credit score.
If your mortgage does take you past your retirement age, the lender will want proof of your income in retirement. If it’s a pension, that would probably require a projection of what you would get when you retire. If you’ve already retired you can prove your pension through bank statements, but if you’ve got all that information before you apply, it would be beneficial.
Lenders will want to see your last three months bank statements, and will be looking to see what you spend your money on. So try to avoid a lot of things like online gambling, and try to stay out of any overdraft.
What is the age limit for getting a mortgage?
Lenders are not allowed to discriminate on age, but all lenders do have different criteria when it comes to age. There are one or two lenders who have a maximum age of fifty-five or sixty when you apply, but you can still get a mortgage when you’re in your sixties and seventies if you pass the affordability checks.
The main criteria, as with any mortgage, is that the lender thinks that mortgage is affordable for the term of the mortgage. Lenders also have a maximum age when the mortgage needs to be paid off, ranging from seventy up to about eighty-five. You might get a lender that has a maximum age of seventy on application, but if that same lender has a maximum age of seventy-five at the end of the term, you will only be able to have a five year term.
Can you get a mortgage after you retire?
Yes, you can, but not all lenders will let you. It would be subject to your affordability over the term, and some will restrict the length of the mortgage you can have.
Can I get a thirty year mortgage at age fifty-five?
You can potentially get more than a thirty year mortgage at fifty-five, but there would only be a few lenders that would do this for you. You wouldn’t get as much choice if it was a specialist lender, and their rates could be higher than what you would normally expect.
Can I get a mortgage at sixty?
Yes, you can get a Lifetime Mortgage at sixty, in fact, they are available to borrowers age fifty-five or above, and there are no upper age limits.
A Lifetime Mortgage is a type of Equity Release, and it’s a loan secured against your house which allows you to release some tax free cash, without the need to move out of your property. You can take the money as a lump sum or as a series of lump sums. The good thing is there are no repayments required until you die or move into long term care.
The amount you can release is based on your age and how much your house is worth. The older you are, and the higher the value of the property, the larger the percentage you can borrow.
Another option can be a Retirement Interest Only mortgage where the lending amount is dictated by your retirement income and you would be liable to make monthly interest payments on the mortgage, but the balance remains the same with no maximum term, so if you can afford the payments you can stay in the property with the mortgage for the whole of your life.
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Should you use Equity Release?
Equity Release can be a good idea for older people who would like to gain some extra cash in retirement or even before retirement, as long as you’re fifty-five or older. It can be good for someone who wants to make home improvements, help a loved one who is struggling financially, or even to pay off debt, but ultimately you can use the money however you want to.
The release of equity isn’t suitable for everyone, however, as the money released will still need to be repaid when you pass away or move into long term care. You’ll owe the capital borrowed and the loan interest accrued over the term, and this will reduce the inheritance you leave behind. That may be a factor you need to consider if you’re looking to leave your property for loved ones. If you do decide to use Equity Release, you will need to speak to a financial adviser who’s qualified to advise you on Equity Release products.
You will need to take legal advice before releasing equity from your home as Lifetime Mortgages and Home Reversion plans are not right for everyone.
Why can it be harder to get a mortgage when you are older?
One reason why older people are typically seen as high risk when you apply for a mortgage is that after retirement you no longer have a regular salary coming in, so your income is likely to decrease. This makes it more difficult for the lender to assess whether you’ll be able to keep up with mortgage payments.
It’s also harder because as you get older, you may have to take a shorter term on your mortgage to meet the lender’s criteria, which then makes the affordability a lot tighter.
What mortgage types can you get as an older borrower?
There are a few different types of mortgage and rates that lenders offer. The most conventional is a cash on interest mortgage, which is where the mortgage is guaranteed to be paid off at the end of the term just by making your normal monthly mortgage payment.
Lenders also offer Interest-only mortgages, but these are mainly for Buy to Let customers. You can also get an offset mortgage, which is more for customers that have savings, as your savings offset the amount of interest you have to pay.
When you apply for a mortgage, they will offer you a Fixed-rate for a specified amount of time, a Discount-rate or a Tracker-rate. The majority are two and five year deals, but some lenders also offer deals for three and ten years.
How can Yellow Brick Mortgages help an older borrower?
A Mortgage Broker like Yellow Brick Mortgages can help you navigate through every stage of the mortgage and take out all the stress of looking for yourself when you’re an older borrower. There are so many aspects to factor in and a broker can find a lender to match everything you require. We’ve got systems to search the maximum age limits, as well as all other criteria in a fraction of the time it would take an individual.
A broker would take the time to review and understand your finances, what’s important to you and what your main objectives are.
Your property may be repossessed if you do not keep up with your mortgage repayments.