Too much too late? Mortgages for the over 55s

J Finance Mortgages for over 55s

Are you too old to get a mortgage?

Nowadays, 55 is hardly old, but if you want to move again, are you too old to get a mortgage? The answer is no. Read on to find out more…

With more people getting married and having children later, it’s not surprising that many of us may be looking for mortgages at an older age. Not only that but more and more people are retiring on an existing interest-only mortgage and need to find a way to pay off the loan to keep their home – or they are looking to release equity in their home to fund their retirement.

The good news, if you want to move and still need to have a mortgage, or indeed want to remortgage to get a better deal, most lenders will lend until age 70 and many to 75 or beyond. And with demand for these products increasing, more and more mortgage lenders are setting up specific products for the older borrower.

Key to this is what age they require a mortgage to be paid off – for instance, you could take out a mortgage at 58, but it would need to be paid back by the time you hit 70, giving you only 12 years to pay back the loan. But with lenders who will lend to age 75 or even 80, the term could be increased to 17 or 22 years.

The reason it has been harder to get a mortgage loan in these circumstances is that the risk increases for the lender – if you are retired, or are going to retire before the loan is paid back, you may be relying on a far smaller income, and lenders need to be sure that you could still afford the repayments.

To prove your income in retirement, you will need to ask your pension provider to provide all the relevant information, such as retirement date, pension value and retirement income. You may also be able to declare income from other sources such as property or shares.

However with many people not stopping full time work until well into their 70s, proof of pension income may not be required.

What sort of mortgage?

Mortgages available to older borrowers are usually at a fixed interest rate, so that you are not hit with a sudden increase in repayments; when your income is set to stay the same.

If you can’t get a standard mortgage, you may be eligible for a retirement interest-only mortgage, where you borrow against your property and only pay the interest on the loan. The mortgage can then be repaid when you sell the property, go into residential care or pass away.

Equity release products allow you to stay in your existing home but use its value to help to fund your retirement or help children onto the housing ladder.

There’s a number of products:

  • Home Reversion. This is where you sell part of your property to a lender and get a lump sum or income in return. They recoup the money when your home is sold.
  • Lifetime interest roll-up. You borrow against the value of the house but don’t make any monthly repayments. Interest is added to your debt each month.
  • Impaired lifetime mortgages. This takes your health into account and may see you receive a lump sum or larger income if you are in poor health.
  • Lifetime mortgage on a drawdown basis. You take out a loan and receive it in regular amounts. Interest is only owed on the money you have taken out.

Because many of these mortgages comes through specialist lenders, it makes sense to get advice from an independent financial consultant, to make sure you get the deal that best suits your circumstances.

If you would like to discuss a new mortgage or any other financial matters, we will be happy to help. Please contact us without obligation.

Established in Berkshire in 2004, J Finance Ltd is one of the leading financial planning companies in the area. We serve clients across England and Wales. If you would like to discuss this subject or any other financial matter, please contact us on 01635 521 300 or email contact@jfinance.co.uk.

EQUITY RELEASE CAN AFFECT THE FUTURE INHERITANCE OF YOUR BENEFICIARIES, NOT TO MENTION YOUR OWN FINANCES. THEREFORE, IT IS IMPORTANT THAT BEST ADVICE IS SOUGHT DUE TO THE COMPLEXITY AND VARIATIONS BETWEEN ALL EQUITY RELEASE SCHEMES.