Mortgages for the over 50s
What Options Are There For Later-Life Borrowing?
Today it is not so unusual for homeowners not to have paid off their mortgage by the time they retire. It is also getting harder to get a foot onto the property ladder in the first place, meaning that many are still paying off their mortgage in their 50s and 60s or as they near retirement.
Life events might also have got in the way – perhaps you are newly-divorced and now need to take out a new mortgage? Or maybe you want to release some equity from your home to help your children onto the property ladder?
Traditional mortgages usually have an upper age limit by which time the mortgage needs to be repaid but increasingly lenders are offering products which have an upper age limit of 85 and some have no upper age limit at all.
Thankfully there are now more options open to the over 50s wishing to take out a mortgage, and in fact some mortgages, such as retirement only mortgages (RIO), equity release and lifetime mortgages, are only available to older borrowers.
Here at VA mortgages we can search the whole market to help you to find the right later-life mortgage for you.
What is Different About Later-Life Mortgages?
Lenders are more cautious about lending to people over the age of 50 because you might be nearing retirement and your income is likely to drop.
This means that the deals available might have more stringent affordability rules than traditional mortgages. However, many lenders appreciate that today a retirement age of 70 is not so unusual and so they are more prepared to lend to older borrowers.
Can I Get a Mortgage on a Pension?
Yes you can take out a mortgage on a pension or take out a mortgage which will continue after you have retired. The key thing to remember is that – just as with any mortgage product – you will need to prove that you can afford to keep making the monthly repayments once you have retired.
It can be more straightforward to take out the mortgage once you have retired rather than a mortgage which bridges your transition from employment to retirement because then you will be able to prove that you have a certain level of income in retirement.
If you are over 50 and want to take out a new mortgage but expect to retire in the not too distant future then you will need to prove to the lender that you will be able to continue making your monthly mortgage repayments.
This can be done by providing details of:
- The age at which you expect to retire
- The current value of your pension pot
- What you expect your monthly retirement income to be
- Additional income from other investments such as shares or other properties
What is the Maximum Age Limit for Mortgages?
Most lenders accept that these days people are working and living for longer. There are now more traditional mortgage products that have higher maximum age limits, with many high street lenders allowing limits of up to 85 years of age. Some smaller lenders have no age limits at all.
To counteract the risk of lending to an older borrower the interest rates available might be higher but a good mortgage advisor can help you to search the whole market and identify the right product for your circumstances.
What Mortgages are Only Available to Older Borrowers?
If you are aged over 55 then you will be eligible for an equity release mortgage such as a Lifetime Mortgage. With this type of mortgage you borrow money against the value of your home. This is repaid when the house is sold, when you move into residential care or when you die. You can find out more in our guide to equity release mortgages.
If you’re younger than 55 then you cannot get an equity release mortgage. Other products are available though and a good advisor can help guide you to the right option for your circumstances.
Have you got questions about equity release? Our guide to equity release mortgages covers everything from how much you can get to what you can use it for, alternatives and much more.
Retirement Interest-Only (RIO) Mortgages
Retirement interest-only mortgages are aimed at older borrowers or borrowers who have already retired. You can only secure a RIO on your main residence. As you only need to pay the interest on the loan each month (not any capital) your monthly repayments will be lower.
The capital of the loan will be paid off when the property is sold when the owner dies or moves into long-term care.
Can I get a Buy-to-Let Mortgage if I am over 50?
The simple answer is yes. A number of lenders now have a maximum age limit of 85 or older at which their buy-to-let products need to be paid off. Some lenders will lend for terms of up to 40 years. This means that older landlords are now far more able to secure a buy-to-let mortgage.
For example: a 65-year-old landlord could take out a buy-to-let mortgage with a term of 20 years to ensure they had paid off the mortgage by the upper age limit of 85.
Can I get a First-time Buyer Mortgage if I am over 50?
Yes, you can get a first-time buyer mortgage if you are an older borrower as long as you can prove that you can afford the monthly payments.
A first-time buyer is just that, someone buying a property for the first time.
HMRC’s definition is: “In order to count as a first time buyer, a purchaser must not, either alone or with others, have previously acquired a major interest in a dwelling or an equivalent interest in land situated anywhere in the world.” Lenders, however, may have their own definition of a first-time buyer.
If you’ve previously lived with a spouse or partner but never been named on a mortgage you may well be eligible for first-time buyer products.
Not all mortgage products will be available to you if you are over 50 so it is a good idea to discuss your situation with a mortgage advisor.
Can I Remortgage if I am over 50?
Yes, in fact remortgaging your home if you have a few years left on your current deal could be a better option. This is because a new or your current lender might be able to offer you a more favourable deal as long as you can prove that you can meet the monthly repayments (in the case of a new lender).
How Can I Increase My Chances of Getting a Mortgage if I am over 50?
Lenders will look more favourably on older borrowers if they have a clear idea of how they will pay off their mortgage and can provide evidence of a decent monthly income.
VA Mortgages are an independent whole of market mortgage advisor. Contact our advisors today for a no obligation discussion about your circumstances.