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In years gone by and even recent months, if we said it was possible to secure a mortgage well into your 80s you probably wouldn’t believe us. Which is likely still the case today. Since the 2008 financial crash, lenders have become increasingly risk-adverse and geared towards a tick-box approach criteria-wise, consequently excluding borrowers even in their forties from getting a mortgage that lends past state retirement age.
Mortgage ageism has certainly become a problem, but as ever, the market is evolving and lenders’ views are changing once more. A handful of lenders have now raised their previously imposed maximum lending age limits and started to consider a wider array of circumstances while adopting an all-encompassing approach – but there is still a long way to go.
It can be hard to keep up with constantly evolving activity in the market, so we’ve outlined the key challenges faced by older borrowers, how or if they’re changing, and how you can still secure the best mortgage for you.
High street lenders are nearly always reluctant to lend to any borrower likely to face outstanding debt once their earnings stop, often even for customers yet to reach 50. Generally, as borrowers get older they tend to have a wider range of incomes and more complex circumstances, which is simply considered too risky a choice for mainstream lenders to accept. As such, many lenders have imposed maximum lending age limits, usually up to 60 or 70.
However, this is beginning to change. In the current market, lenders are offering some of their best deals yet and have been loosening criteria as a result. A handful of lenders – such as Nationwide and Halifax have now raised these limits to 75 and 80 respectively.
Lenders will generally ask for evidence of your expected income at the age of 70, so you can demonstrate a sufficient amount of personal income to ensure security of the loan to a lender. Yet this criterion is becoming increasingly fragile. Many borrowers are not only stepping onto the property ladder later in life, be it due to house price rises or simply an increase in rental society, but are also working beyond state retirement age. As such, some lenders have started using a borrowers’ ‘anticipated retirement age’ to calculate affordability instead.
Numerous private banks and smaller building societies are now offering mortgages to those in their 70s, 80s and even 90s, as well as providing more flexible interest only products and lending age limits than found on the high street. Retirement doesn’t have to mean a loss of earnings and more often than not, continues as a period of stable and considerable income. Because of this, private banks take a holistic approach and will work to suit a customer’s personal situation and requirements, rather than a tick-box list of stringent criteria.
As with securing any type of finance, we would always recommend you are aware of how much you will need to repay, how you plan to do so and if anything has the potential to turn pear-shaped. It is also important to consider any other sources that may work in your favour, such as additional assets or a substantial final salary pension. Proof of pension or investment income is especially key for providing evidence you can sufficiently service the loan. Equally, most lenders cap terms the older you get, so although fixed and variable rates may still be available for borrowers on a fixed income (such as pensions), they can pose higher risk and come at a greater cost.
Overall, we would always recommend using an expert broker to help determine and access the very best deals and products for your circumstances. It is our job to provide the knowledge and expertise of what lenders will offer and shy away from, while supporting your application through every stage of the mortgage process. It is a broker’s job to ensure you avoid risking your credit score or have an application turned down, and most importantly, achieve the end goal of your mortgage.
We believe strongly in keeping our clients as informed as possible, so we hope you have found this useful. For more details, please do have a flick through our guide library, where you will find in-depth, market-leading whitepapers on the mortgage process and specific product-related information.
If you have any questions about this article, or the mortgage process generally, please do get in touch below.