Tips for getting a mortgage for the over 50s
With people living and working for longer, many in their sixth decade remain energetic, with plenty of things they’re determined to achieve. But when it comes to mortgages, age may not be ‘just a number’.
After all, lenders do take age into account when deciding home loan eligibility, given that your income post-retirement won’t involve a monthly salary, and realistically pensions usually mean a drop in money coming in. Equally, potential health issues for over-50s mean a possible risk in terms of repaying the loan in full.
So, many lenders have age restrictions on the products they offer. That doesn’t mean it’s impossible to secure a mortgage post-50 or retired. But, as with all home loans, you need to prove you can make the monthly repayments, possibly within a shorter timeframe than for someone younger.
The good news is that lenders are becoming more flexible, with many of the UK’s biggest lenders offering mortgages for those aged fifty-something and beyond. The choice, particularly if you’re in your early fifties and in full-time employment, could be bigger than you think.
Bagging the best deal always depends on how much you want to borrow and how long for. But you should find fixed-rate, variable, tracker, buy-to-let and other products available. Some mortgages, including retirement interest-only and lifetime (based on equity release) offerings are aimed specifically at older homeowners.
While there’s no set age limit for taking out a home loan in the UK, lenders usually have their own age-based restrictions. So your years are considered in terms of both the age at which you take out a new home loan, and when the repayment term ends.
However, some lenders may not have such limits, particularly local, smaller building societies and banks.
Again, getting a mortgage in retirement is perfectly possible, although you may find your options rather more limited. Your lender just needs to be happy they will get their money back.
Stricter lending criteria for older borrowers
This can take the form of:
- Being offered shorter repayment periods
- Fewer available deals – for example, interest-only products could be thinner on the ground
As an older borrower, if you don’t have that much time left to run on your mortgage, remortgaging may be a more attractive option.
How much will I be able borrow after hitting 50?
It all depends on your financial circumstances, outgoings and income, plus the size of deposit you have available.
Over 60s may only be able to apply for a mortgage term of up to 15 years, while restrictions may be even more stringent for those aged 70 or older.
Remember that while shorter loans work out cheaper overall, repayments will probably be higher, so be sure of what you can afford.
How can I boost my chances of successfully applying for a mortgage as a fifty-something?
As at any other stage of life, eliminate needless outgoings, pay bills on time, check your credit score (you can do this for free) and don’t take out any other loans too close to applying for a mortgage.
If yours is a joint application, unfortunately you also need to think about how one partner would repay the loan if one of you were to die.
You’ll need to show a mortgage lender (or potential one) evidence of what you currently earn. That includes retirement income (such as a pension forecast) if the loan period is extending in to your post-work life.
You’ll probably also need to supply bank statements for your potential lender to check out your regular outgoings before deciding the sum they’re happy for you to borrow.
Above all, have a plan for how you will repay the loan.
Of course, it will help if you have good savings for a hefty deposit. Other bonuses including owning your existing home (and therefore the associated equity) outright, and having a continual income, perhaps in the form of investment, shares or a private pension.
A proven past track record of being good with money will definitely work in your favour.
Can we port our mortgage?
This means taking your loan with you when you move. In essence, you reapply for your current mortgage and are reassessed as if you’re making a first application. So you’ll need to meet new affordability criteria. Things could have changed and, realistically, your application for ‘porting’ could be rejected.
What about equity release?
There are a couple of commonly used types, both ways of freeing up money from your house tax-free:
- A lifetime mortgage, in which you take out a mortgage on your principal home and receive a lump sum or smaller multiple payments, without moving.
- A home reversion plan – here, you sell all or part of your home for one or regular cash payments. Again, you remain in your home. Eligibility typically begins at 60, for the lifetime mortgage product it’s usually 55.
And if I can’t get a mortgage?
As mentioned, no two lenders have identical lending criteria, so it’s always worth shopping around. And the best place to start is with a good mortgage broker. At The Mortgage Centre, we have extensive experience in working with this market. And we have a good understanding of which lenders may be more amenable to older homeowners. We’re all about honest, friendly advice – give us a call and we’ll take it from there.