Generally, getting a mortgage if you are self-employed is a little trickier than for anyone in a more traditional employed role. However, if you are self-employed and over the age of 65, you will find making any kind of change to a mortgage can be challenging if you are operating alone.
Firstly, it’s often helpful to understand what lenders are looking at if you are past the usual retirement age and if you are self-employed and want to extend your mortgage.
Firstly, some lenders can think of self-employment as being somewhat riskier than employment and that it brings in little or sporadic income. This is often not the reality, and many of Enness’ clients are self-employed and have significant assets and revenue. If this is true for you, presenting this information to lenders upfront and shining a light on the strength of your financial position will be very helpful for your case.
Next, many of Enness’ self-employed clients want to work later in life. For many high-net-worth individuals, working is something they are hugely passionate about, and they have no plans to retire or sometimes to slow down at all when it comes to working. Many lenders – mostly alternative lenders and private banks – will be very receptive to this if they are made aware of it. Working beyond 70 because you want to and because you are happy to carry on generating income is vastly different from working beyond 70 because you have little or no money. When lenders know this, they may be more apt to lend.
Lastly, lenders will want to know why you want to extend your mortgage. Here, it’s important not to try and ‘outthink’ lenders, guessing at what they would deem to be reasonable motives for extending a mortgage or not. Be open, explain your situation and exactly why you want to extend your mortgage. If your financial footing is strong and you have a valid reason, many lenders will consider letting you extend.
How long you want to extend your mortgage for will be a crucial point for lenders. For some lenders, 15 years will be out of the question; others might be able to consider it. Generally, extending for a relatively short period of 6-36 months will be easier than a longer extension, although extensions of 5 or more years can be possible.
In the past, it was nearly impossible to find a mortgage that would go beyond the borrower turning 65 (either through its natural term or an extension). Today, as it’s more common to work for longer, some lenders are more flexible for later in life borrowing, although not every lender will be.
Generally, alternative and boutique lenders and private banks offer far more flexibility than high street banks, although some high street lenders, (especially building societies) will now consider older borrowers.
Before extending a mortgage, it’s essential to understand what it will mean financially, and you’ll need to make sure you can comfortably afford repayments. Your age should always be a consideration. As you get older, you may find things change, and you want to take a step back from working altogether or find that working part-time is a better fit – ensuring you could afford to stop or reduce how much you work if you want to is critical.
If you want to extend your mortgage later in life, lenders will look carefully at your income. This can be in the form of the salary you derive from your business but can also include assets, investments or any dividends which generate income. As always, lenders will want to know how you plan to make your monthly repayments, how secure this income is as well as ensuring you can comfortably make repayments.
Enness regularly works with borrowers with unusual situations, including self-employed individuals and those who want to extend a mortgage later in life. If you have any questions about a similar scenario and would like to understand more about what your options would be, get in touch.