Getting a mortgage can be more difficult when you get closer to retirement. Here is how to find one whether you want to move house or remortgage your current home.
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.
It's commonly believed that mortgages for older borrowers are hard to get. That might be true to an extent, but that doesn't mean that older people can't get a mortgage.
While there is no maximum age for applying for a mortgage, each lender has its own age mortgage age limit:
Typical age limits can be:
This means that even if you are below the maximum age for a mortgage, its term could be limited by how old you are.
If you are 60 and want a mortgage that must be paid off before you reach 70, its term could be no more than 10 years.
You have a better chance of being accepted if you have a strong credit history and if your income is high enough to easily cover the mortgage repayments.
If you retire before you have finished paying off the mortgage, you will not have a regular salary any more. Your income will usually go down, meaning lenders will be unsure if you will still be able to afford the mortgage repayments.
This means that offering you a mortgage is riskier as you get older. Lenders have to follow the Mortgage Market Review (MMR) rules, which mean they have to make sure you can keep up with repayments over the full term of the mortgage.
Yes, some lenders will let you:
You will need to prove that the income from your pension would be more than enough to cover the repayments on the mortgage. It is usually easier to do this if you are already retired because you can show how much you get each month.
If you have not retired yet, you will need to ask your pension provider to give confirmation of your:
You could also give proof that you will have an income from other investments like shares or property.
Most mortgages that accept older borrowers come with fixed interest rates, and many offer rates that track the Bank of England base rate.
There are also some offset, cashback, discount and stepped mortgages available too. Here is how to work out which types of mortgage is best for you.
You could use an equity release mortgage to withdraw part of the share of your home that you own as a lump sum or monthly income. You could then use this to:
The amount borrowed will be repaid back when the house is sold, usually after the borrower has moved into a care home or passed away.
However, it can be an expensive way to borrow. Here is how equity release works and if it is right for you.
To understand the features and risks, ask for a personalised illustration from a lifetime mortgage company. Check that this type of mortgage will meet your needs if you want to move or sell your home or you want your family to inherit it. If you are in any doubt, seek independent advice. Your home may be repossessed if you do not keep up repayments on your mortgage.
If you're a first time buyer or looking to move house or remortgage, we can help you find the best mortgage deal to suit your needs.