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Building Societies could offer mortgages to older borrowers

Older borrowers could soon be offered mortgages into their 80s and 90s as building societies review their age limits.



With an aging population building societies are now reviewing their upper age limits for mortgages according to the Building Societies Association (BSA).

The BSA represents 44 building societies has said by 2034 roughly a quarter of the population will be over 65 and mortgages that last into retirement were more common.

As such it’s members were committed to review their maximum age limits to support older people such as home movers and remortgage buyers that need a residential mortgage.

Age limits difficult for older borrowers

Younger first time buyers, home movers and remortgage buyers must repay their loan by the lenders age limit, such as 75 years, which is a problem for older homeowners with interest only loans.

By this age the mortgage must be repaid although the regulator allows lenders to extend the term of the loan rather than repossession.

If you are on a repayment mortgage, to minimise the monthly cost for affordability reasons you may need to have a 25 year term and this is only possible if you are under the age of 50.

For many lenders the loan must end at the State retirement age which depends on when you were born and is usually from 65 to 67, so even those in their 40s are restricted. For interest only mortgages the age limit can be lower at age 65.

For example, for a couple aged 47 some lenders would limit their repayment mortgage to their State retirement age of 67, so the maximum term is only 20 years. This increases the cost as capital must be repaid over a shorter term.

The lender age limits could also apply to first time buyers as the average age to own your first home is now 31 and is expected to increase to 40 in the next ten years due homeownership affordability and rising property prices.

Flexible options for older homeowners

In the UK there are 11.6 million people over the age of 65 and this figure will increase until by 2034 a quarter of the population will be over this age.

About 35% of borrowers will be aged over 65 when they repay their mortgage. The BSA says half of those aged 25 to 43 think they will have a mortgage lasting to retirement.

The Building Societies Association has said many of the 44 members are looking at extending the mortgages for older homeowners into their 80s and 90s.

Older homeowners are often forced to repay their loan and the equity release buyer can agree a lifetime mortgage without any evidence of earnings which is important for borrowers with only pension income.

Furthermore, the BSA report said by creating a better market for older home movers, this would free up homes further down the ladder and ease Britain's housing shortage.

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 even pay for care at home.

Learn more by using the equity release mortgage calculator, property value tracker chart and mortgage cost calculator. Start with a free mortgage quote or call us and we can take your details.

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.

Use your dashboard to access online mortgage quotes, money off vouchers and start your mortgage application online 24/7 on desktop, tablet or smartphone.


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