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.
First time buyers are now in their 30s or 40s when they buy their home due to rising house prices 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 |
|
|---|---|
| Bath | Buckinghamshire |
| National Counties | Holmesdale |
| Cambridge | Monmouthshire |
| Loughborough | Saffron |
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 or if you have an interest only mortgage your lender may require you to repay the loan when you reach a certain age such as 70 or 75.
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 |
|---|---|
| Natinowide | 85 |
| Marsden | 85 |
| Leeds | 80 |
| Furness | 80 |
| Halifax | 80 |
| Santander | 75 |
| Virgin Money | 75 |
| Lloyds | 75 |
| Clydesdale | 75 |
| RBS | 70 |
| Barclays | 70 |
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 homeowners may be forced to repay their loan at the end of the term and rather than downsizing, they can agree a lifetime mortgage if their home is considered an acceptable property for equity release as providers as concerned about the ability to sell in the future.
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 than residential mortgages, typically 3.0% for variable rate to 3.79% for the provider fixed interest rate.
See how the fixed interest rate can roll-up over time and how you can make an overpayment to reduce the cost with this link:
Free equity release calculator with instant results for fixed interest rates.
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.
Compared to home reversion plans, lifetime mortgages are more popular as you retain 100% ownership of your property and allowed to you to live in your home for your lifetime or until you move to a residential care home, t which point the property will be sold and the loan repaid.
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.
Equity release can be used for relocating and buying a new property, to pay off existing interest only mortgages or other loans, or any other purpose such as home improvements and other one-off expenses.
What are your next steps?
Speak to our London City Mortgage advisers when you repaying an interest only mortgage, we can recommend the equity release product and manage the application through LCM.
Find out which providers are offering the most competitive fixed interest rates to clear your existing residential mortgage using this link:
Free equity release quote with leading fixed interest rates repaying your current mortgage.
At LCM our mortgage advisers can identify the provider and products to satisfy your existing needs. Learn more by using the equity release calculator, property value tracker chart and mortgage costs calculator.
