Looking to apply for a mortgage in later life? Contrary to what you might think, it’s not too late to become a borrower in your fifties, sixties and beyond…
If you think it’s too late to take out a mortgage in your fifties or sixties, think again. Borrowing in later life has actually become far more common in recent years, for reasons such as divorce or the desire to relocate. As such, mortgage lenders have had to reassess their criteria, with many becoming more flexible. Here’s what you need to know about an over-50s mortgage…
1. There’s more choice for older borrowers
As life expectancy has increased – meaning more people are working for longer – the borrowing landscape has changed significantly in recent years. Lenders have adapted to recent circumstances and, as such, it’s perfectly possible to take out a mortgage in your later years – even when you are in your seventies, in some instances! The moral of the story is, don’t assume you will be turned away if you’re hoping to take out a mortgage close to your retirement years – there is now far more choice for older borrowers than ever before.
2. Your age might affect your borrowing term
There is no set age limit for applying for a mortgage; instead, lenders set their own terms. For example, to apply for a mortgage with Lloyds, you must be no older than 80 at the end of your mortgage term. Your age will therefore likely affect your mortgage term. If you’re looking to take out a mortgage in your fifties, it’s likely you’ll still be offered a standard mortgage term of 20 to 25 years, although you might be asked to prove your estimated pension income. As you get older – for example, if you wish to take out a mortgage in your sixties or seventies – you’ll need to take into account the fact that the term will be shorter, and therefore your monthly repayments could be significantly higher.
3. You will need to prove you can meet repayments
As with taking out a mortgage when you’re younger, you will need to prove to your lender that you can meet your mortgage repayments. If you’re likely to reach retirement age during your mortgage term, you will not only need to provide evidence of your current income and outgoings, but also evidence of savings and financial stability, as well as your anticipated income after retirement, including details of your state pension and any private pensions, as well as any other income you might have, such as from properties or investments.
4. You should think about the future
If you’re considering taking out a mortgage, it’s important to understand what it will mean for your future circumstances. For example, taking out a mortgage later in life might affect the net value of your estate and what you can pass on to beneficiaries. It’s important to weigh up both the positives and negatives of a later-life mortgage. An experienced broker can talk you through the pros and cons and help you find the right bespoke solution.
5. Different lenders have different criteria
If you’ve done some independent research – perhaps approaching a particular lender – and haven’t had any luck, don’t give up hope. Lenders can set their own terms for over-50s mortgages, and they have different criteria and thresholds, so just because you haven’t been successful with one lender doesn’t mean you won’t be successful with another. For example, a specialist lender will tend to be more flexible than a high-street bank. Speaking with an experienced broker can therefore make a huge difference, as they will have access to a wide range of lenders and products, and can help find a bespoke solution to meet your needs.