Unfortunately the phrase "You're never too old!" is not one that lenders like to bandy about but the good news is that there are options open to you but whether your mortgage application will be accepted is very much down to affordability.
The other thing to watch is your age at application. Lenders have rules on this kind of thing and a majority will not allow applications past your 75 birthday - Halifax will go to 77 but Nat West only 67.
When we are looking at mortgages for those of a certain age, we look first of all as to whether you are already retired or still working. There are certainly more options if you are still earning but it very much comes down to how much.
We'll look at the following here
STANDARD MORTGAGE - NON RETIRED
STANDARD MORTGAGE - RETIRED
RETIREMENT INTEREST-ONLY MORTGAGE
EQUITY RELEASE
STANDARD MORTGAGE - NOT RETIRED
Generally, the lenders will all go up to 70 years of age. So they will calculate the term of the mortgage on the basis that your mortgage will end when you are 70. There are some lenders that will take you to 75 like Santander and Newcastle Building Society will take you up until the grand old age of 80. You need to be able to demonstrate that you are not lugging bags of coal for a living, however. The lenders are not too keen to lend where there is an expectation that the borrower will be doing manual work into their dotage. It's desk-bound if you are to stand a chance with Newcastle.
STANDARD MORTGAGE - RETIRED
If you are retired or want to extend the mortgage into your retirement then the lenders will base their decision on your retirement income. As a result a lot of borrowers, fall at this first hurdle. It is for this reason that there are very few mortgages that get through the lenders' watchful eye when it comes to mortgages based on retirement income. If you can get over the income /affordability hurdle then the benefit is that you can run your mortgage from anywhere between 75 - 80 with a lot of High Street lenders and Leeds Building Society will lend until your 85 birthday if you are using pension income to satisfy affordability
RETIREMENT INTEREST-ONLY MORTGAGE
There is a subset of mortgages that rely upon retirement income and these come with the option of interest-only repayment. For many, these mortgages have become an alternative to Equity Release as they will keep the payments to a manageable amount allowing the occupants to remain in the property without having to think about downsizing. These mortgages have no time limit and run until death as long as the mortgage remains paid. You are looking at Leeds Building Society and Scottish Building Society as the home of the RIO mortgage amongst others. You need to be over 55 and under 80 for Leeds Building Society
EQUITY RELEASE
And then we have Equity Release. You can get this type of mortgage and base it on an interest-only model. These companies who are generally large insurance companies will lend based on age and the value of your property rather than your income. Interest rates are slightly higher than those charged in the RIO sphere
So there you have it.
Hoping that gives you a bit more of an understanding of how lenders look at age when deciding when to lend.
So important to get advice on this kind of thing. It is a really important decision that you are making so make sure that you get the right advice.
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