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55 plus mortgages

The rise in house prices has made it difficult for people to buy their first home resulting in the average age of a first time buyer rise to 30 and a home mover to 39 years of age.

Changes in regulations after the financial crisis has placed more emphasis on lenders to check affordability of borrowers when they apply for a mortgage and their ability to pay back the loan at an age limit, making it harder to borrow after retirement.

Many homeowners at the end of their mortgage term must either pay back the loan as a lump sum or sell their property and downsize, however, it is possible to re-mortgage to a new lender or consider equity release.

There are now more lenders willing to extending the age limits beyond normal retirement age of 65 and equity release plans that do not require you pay back either the interest or the loan during your lifetime allowing you to stay in your home.

With independent advice from London City Mortgages we can help you find the mortgage to allow you to remain in your home. We can help you find the best remortgage deal or for older homeowners use equity release and make the online application process easy for you.

Age limits from lenders

The age limit set by a lenders means you must pay back your mortgage by a certain age, such as age 75. The shorter the number of years to this limit the higher will be the monthly payment and if you are in retirement this may be more than you can afford.

Here is an example if your property is worth £300,000, your mortgage is £100,000 and you re-mortgage with a preferential rate of 1.49% fixed for two years which must be repaid by age 75.

If you are currently aged 55 the term is twenty years and your monthly payments are £482 per month, however, if you are aged 65 the term is only ten years with payments almost twice as much at £897 per month.

Due to changing demographics with people working longer many have no set retirement age and want to continue to pay their mortgage until they are older.

Lenders are raising their upper age limits for first time buyers, home movers and remortgage buyers and there are a number of building societies that have no age limits.
Building societies with no age limits
Bath Buckinghamshire
Cambridge Holmesdale
Loughborough Monmouthshire
National Counties Saffron
 

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

Rising house prices mean first time buyers, home movers and re-mortgage buyers are now much older and have larger mortgage debts to repay which may not be possible before the traditional retirement age of 65 years.

A report from the Building Societies Association (BSA) shows the UK has 11.6 million people over the age of 65, which could rise to 16 million in the next twenty years.

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 there are 33 societies who have chosen to increase their upper lending age limit to 80, 85 and here as some examples:
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
There may be further restrictions for older borrowers such as the loan limited to £150,000 for new borrowing and a maximum 60% loan to value (LTV).

Your home and equity release

Equity release is offered from age 55 although the amount you can borrow increases from 31% with the youngest ages to about 63% for those aged 80.

This approach is popular if you have already paid off your mortgage, are retired and perhaps your income no longer stretches as far so extra income or capital sums would be useful for maintaining your standard of living.

It can be used if you need to repay your mortgage, are unlikely to meet the lenders affordability tests and do not want to make any monthly interest payments.

The main reasons people consider equity release and the percentage of those asked that agreed this is what they would use the money for are as follows:
Agreed
Main reason for equity release
63% Home and garden improvements
31% Holiday of a lifetime
30% Pay off debts or personal loans
23% Help family members
22% Pay off interest only mortgages
16% Meet everyday expenses
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 benefit of these plans is that you can 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.

Interest rates are higher than a conventional mortgage with the lowest interest rates from 3.0% variable and fixed rate from 3.79%.

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.

Unlike a residential mortgage, if you have any medical conditions these can be taken account and allow you to take a higher loan as a proportion to property value.

If you do not need to take the maximum allowable loan using equity release it is possible to agree the initial advance and take a drawdown for the amount you want leaving you the opportunity to take further amounts when needed, helping you to reduce the interest costs over time.


55+ Mortgages Best Buys

These are examples of equity release products we can approach with many more offering interest rates and flexibility to meet your needs.

2.75% Fixed Rate
Interest Roll-Up
20% Loan to Value
£5 App Fee
2.79% AER
2.58% Fixed Rate
Interest Roll-Up
25% Loan to Value
£629 App Fee
2.61% AER
2.60% Fixed Rate
Interest Roll-Up
20% Loan to Value
£629 App Fee
2.63% AER
2.83% Fixed Rate
Interest Roll-Up
15% Loan to Value
£5 App Fee
2.87% AER

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  • IMPORTANT

    Equity Release may involve a Lifetime Mortgage or a Home Reversion Scheme. To understand the features and risks, please ask for a personalised illustration. Equity Release may affect your entitlement to means tested state benefits and will impact on the size of your estate. For Equity Release London City Mortgages charge a fixed fee upon completion of £695. For Mortgages a fixed fee is charged on application. Typically this is from £295 up to £495 for the services selected.

  • WARNING

    Equity Release - Equity Released from your home will be secured against it. Mortgages – Your home may be repossessed if you do not keep up repayments on your mortgage or other loans secured against it. Think carefully before securing other debts against your home. The information contained in this website is subject to the UK regulatory regime and is therefore intended for consumers based in the UK.

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    London City Mortgages Limited is a registered company in England & Wales under company number 09278987. London City Mortgages Limited is an Appointed Representative (FCA no. 655965) of Blackstone Moregate Limited (FCA no. 459051) which is authorised and regulated by the Financial Conduct Authority. LCM and LCM Equity Release are trading names of London City Mortgages Limited.

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