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Getting a mortgage as an older borrower

older borrowers

Many people move home in their 50s, but how easy is it to get a mortgage as an older borrower?

Once your children have flown the nest it’s often a time to re-evaluate your space. It may be that you want to downsize your property to a smaller one.  You may decide you need a larger home to accommodate all your grandchildren.
It may be even an opportunity to purchase your dream home in the country.

Whatever your reason for moving, you’ll want to make sure that your finances are in order.  For many this may mean that you have to take out a mortgage.

As an older borrower it could be difficult to be accepted for a mortgage.  At this age, you are likely to have a decent amount of equity in your property, but even if you have the money in the bank and an exemplary credit history there are still some hurdles which you may have to cross.

As you edge closer to retirement, your income is likely to be at its peak.  However you also have less years of earning ahead of you. A mortgage lender will need you to prove that you’ll still be able to make the repayments for the length of your mortgage term.   As an older borrower this could last well into your retirement. You’ll need to make sure that any income from your pensions or investments will be enough to cover the repayments.

Due to your age, you’ll likely want a shorter mortgage term, but this may mean that the payments are higher than average.  Affordability is something you will need to take into consideration.

What are my options as an older borrower?

There are many mortgage lenders that will lend to those in their 50s but typically have an upper age limit by which the loan must be repaid.  This is often around 70 years old but there are a limited amount of lenders who will consider borrowers up to the age of 80. Many people carry on working later into life, so lenders have begun to reflect this in their terms.  However this will still only give you 15-20 years to pay off your mortgage so you’ll need to be certain that you can pay off your mortgage within this period.

Lifetime mortgages, or equity release schemes may be tempting to older borrowers over the age of 55.  This form of mortgage may appeal to those on a lower income as there is usually no monthly repayment.  Instead the compound interest means that over time the equity in your home will deplete.  In some cases there will be little or no money left in later life to leave to your children or to pay for care costs.

Equity release is a serious commitment so it’s certainly worth seeking independent financial advice if this is something you are considering.

Finding the right lender

Some lenders offer deals that are specific to older borrowers, however these may be more expensive. As an older borrower, there is nothing to stop you from taking out a standard mortgage, as long as you meet the lender’s criteria and can prove that you will be able to make the repayments. As with any mortgage, it’s always worth shopping around to make sure you get the best deal.

If you are worried that your options may be limited due to your age, then it’s probably wise to speak to a mortgage broker. Using their expert knowledge of the market, a broker can help to identify which mortgages are suited to older borrowers, and which lenders are likely to accept you.

For more information on mortgages for older borrowers speak to So Smart Money today.

The above post does not constitute advice – financial, legal or otherwise. The information within this article is the author’s own opinion and do not necessarily reflect the views of SO Media or So Smart Money.


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