Following recent news that there are many householders facing a shortfall on their interest only mortgage, perhaps the biggest worry is for those over the age of 55.
Having put no additional savings aside, and time dwindling away prior to retirement, householders on interest only mortgages that fall into this age bracket have good reason to be worried, as if they are unable to pay off their mortgage at the end of the term, they run the risk of losing their home.
By acting now many of them have a chance to change things around, and one of the ways to do this is by swapping to a repayment mortgage to make sure that the full capital as well as the interest is being paid off.
Obtaining a new mortgage past the age of 55 is certainly not out of the question, but there will be a few factors to take into consideration.
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What will my lender need to know?
Firstly the number of lenders that are prepared to lend you the money may be much more limited. You may find that your current lender is unable to provide a mortgage for over 55s so it may be that you need to shop around a little to find a provider that can.
As with all mortgages, whatever your age, the amount you’ll be able to borrow will depend on various factors including your current financial situation. The lenders will look at the amount of deposit you have, your current income and any other outstanding debt that you may have.
One of the most important things to a lender will be your ability to be able to pay back the mortgage and whether or not you are perceived to be a risk to them.
Of course, the older you become a much higher risk to the lender as there becomes less time for you to be able to pay off the mortgage.
With less time to make the repayments than someone twenty or thirty years younger, the lender will need to know that you will have a sufficient income in retirement to be able to make the repayments and cover the term of the mortgage.
You’ll be expected to have a regular form of income whether it is from your current job, or if you are retired, a sufficient pension to be able to cover the monthly payments.
If you own any other property outright then this could also work in your favour with your lender, as if you are unable to cover your current mortgage, you have other assets that could be used as payment.
If you are already of retirement age and require a mortgage, your lender may ask that you have someone to act as guarantor to cover your outstanding debt such as a younger family member with a regular income or other financial security.
Do I have any other options?
If you are worried about paying off your current interest-only mortgage, then you may want to look at other options to take.
Read our Blog: Do you have an interest-only mortgage?
What should I do next?
If you are over 55 and need to consider taking out a new mortgage then it’s always best to speak to someone for specialist advice in order to for you to choose the best solution for your individual circumstances.
You can speak to a qualified mortgage adviser for expert help and advice, with absolutely no obligation.
The above post is intended to be informative but does not constitute advice – financial, legal or otherwise. Any opinions given are the author’s own do not necessarily reflect the views of SO Media or the Mitchell Farrar Group.
THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.