When it comes to getting a mortgage, age can be an important factor. Those over 60 and post-retirement may find it particularly difficult to find a lender that will work with them. This is for a number of reasons, mainly due to the drop of income that happens after leaving work, as well as the potential length of the mortgage. Banks and lenders look for ideal candidates and traditionally, those who are older can be seen as less ideal. This being said, we have an ageing population and more people are looking for mortgages later in life. Therefore, with this demand present and growing, the market is changing its attitude towards older borrowers.
With this in mind, what mortgage options are available for those who are over 60?
Mortgage Types
There are different types of mortgages that you can choose from but they basically fall in to two categories. Standard residential mortgages are what most of us think of when we think of a mortgage, a loan to purchase a home, which is then paid back over time. However, there are mortgages available for existing homeowners, allowing them to release equity – which is particularly popular as a way to fund retirement.
Considering that many equity release mortgages are aimed at those who are older, those over 60 will have a better chance of acquiring these types of loans.
Within this category, there are different types of equity release mortgages available:
Lifetime mortgages– available to those 55 and over, allow you to borrow against the value of your home, as a way to fund retirement. Whilst you’re living in the home, only the interest payments need to be made. The full amount is due when the person in question dies or moves into long-term care, at which point the property is sold.
Retirement interest-only mortgages have a lot in common with a lifetime mortgage but with some small deviations. These types of mortgages are available to those over 50 and borrowers must pay off the interest each month. Those who choose this scheme will have to prove that they can afford these repayments, before being accepted. Similar to lifetime mortgages, the full amount isn’t paid until the last homeowner dies or goes into long-term care.
Home reversion involves the homeowner selling part of their home to the plan provider, freeing up money. You are then allowed to continue living in the home until you die or go into long-term care, at which point the provider sells their share.
Standard Residential Mortgages
Standard mortgages, in which you are looking for a long-term loan in order to purchase a home, can be much trickier for older applicants. This is due to a number of factors, including a shorter-repayment scheme period, reduced income and the overall fear that the borrower won’t be able to repay the amount. In fact, many lenders will have maximum age limits for those who can apply for a mortgage or an age at which the mortgage must be repaid.
Those who are older may find it more difficult to get a mortgage but it’s not impossible and there are ways in which you can improve your chances.
Just like with every form of borrowing, lenders are looking for good candidates, so any way in which you can prove this will help. Therefore, you need to ensure that your credit score is healthy and if it isn’t, try to improve it. You also need to prove that you have the relevant income in order to make repayments to your mortgage. Ensure that you collect all of the relevant documentation pertaining to income. If you don’t meet the threshold, then you can try to boost your income or reduce any debts or overheads.
It may feel like an uphill battle at times but those who are over the age of 60 can and do get mortgages. With an ageing society, it’s likely that more options will become available as we adapt to changing times.
If you’re looking for expert advice on mortgages or any other financial issues, don’t hesitate to get in touch with the team at Salhan Accountants.
