Mortgage age limits for older borrowers increase from age 75 and over due to changing demographics and people working longer.
With a changing population and no set retirement age people want to continue to pay their mortgage until they are older and lenders are raising their upper age limits for first time buyers, home movers and remortgage buyers.
Rising house prices also mean first time buyers are now in their 30s or 40s when they buy their home and unlikely to have paid off their mortgage by the traditional retirement age of 65 years.
Many lenders now realise a need for change and large banks and building Societies are raising the age limits although there remains the requirement for borrowers to demonstrate affordability for the mortgage.
Lenders increasing age limits
A report from the Building Societies Association (BSA) shows there are now 33 societies who have chosen to increase their upper lending age limit to 80, 85 or have removed the age limit all together.
The following are examples of building societies with no age limits:
|Examples of building societies with no age limits
Since the Mortgage Market Review (MMR) in 2014 banks and building societies have been required to have stricter lending requirements in terms of affordability and how the mortgage is repaid.
As a result this approach reduced the willingness to lend to older homeowners such as remortgage buyers and home movers.
According to the BSA the UK has 11.6 million people over the age of 65, which could rise to 16 million in the next twenty years with more lenders increasing their maximum age limits and here as some examples:
|Mortgage lender||Maximum lending age
Nationwide recently increased their maximum age limit which is available for existing homeowners and remortgage buyers from other lenders.
There are restrictions as the maximum loan is £150,000 for new borrowing and limited to a 60% loan to value (LTV). Homeowners must also demonstrate they can afford the payments from their retirement income.
Older remortgage buyers may be forced to repay their loan at a certain age and rather than downsizing, the equity release buyer can and agree a lifetime mortgage.
Releasing equity from your home
Residential mortgages have the advantage of low interest rates typically from 1.29% fixed rate but have stringent borrowing requirements such as affordability and a suitable repayment vehicle.
If you only have a low retirement income you could also consider equity release although interest rates are higher typically from 3.0% variable rate to 3.79% fixed rate than residential mortgages.
Equity release products, also called a lifetime mortgage, do not require any proof of income and you can either pay interest as you go along or roll up the interest for your lifetime.
The plan does not require you to make any payments so interest roll up would result in paying interest on interest.
As an example, if you released £100,000 using equity release at a fixed rate of 4.46% the amount you would owe in ten years would increase to £156,000 and by year 15 this would be £195,000.
You can use equity release to pay off existing interest only mortgages or other loans, or any other purpose such as home improvements and other one-off expenses.
The plan allows you to live in your home for your lifetime or until you move to a residential care home at which point the property will be sold and the loan repaid.
What are your next steps?
Talk to our London City Mortgage advisers if you are an older homeowner releasing equity from your property, we can recommend the lifetime mortgage to access wealth for home or garden improvements and holidays.
At LCM our mortgage brokers can provide advice if you are a first time buyer, moving home, want to remortgage your existing home to a new cost effective mortgage deal or are a buy-to-let investor.
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