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Mortgage tips for Over-70s

Mortgage tips for Over-70s

Category: Retirement

Updated: 15/11/2012
First Published: 13/11/2012

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I'm currently in a rental property, but now wish to purchase a house. I have 85% deposit, but need to borrow c. 15%. I have previously owned a house, mortgage free, have a sound credit rating and am over 70. My bank states they can only lend the money for home improvement! Can I get a mortgage loan in this circumstance?

Dragging existing debts into our later years is, rather depressingly, becoming commonplace nowadays, impacting on income, outgoings and any well-intended plans for a stress-free retirement.

In today's world where a growing number of people face the prospect of working well into their retirement years, it is hardly surprising that more people aged 70 and over are looking to secure mortgage deals.

Whilst savings accounts for people aged 50 and over are well-publicised, it is a different story when it comes to looking for a mortgage, or any kind of borrowing for that matter.

Just 26 mortgage lenders advertise a maximum lending age of 75.

What to consider before applying

As an older borrower, your three primary considerations should be:

• The value of the property
• The amount which you wish to borrow
• The amount you can afford to repay each month.

As mentioned before, any income from investments will help to bolster your monthly funding. A larger income could also increase the chances of borrowing a higher percentage of the property.

What type of mortgage?

Ask yourself whether you need to take out a standard mortgage, or opt for an equity release scheme.

Discuss your retirement and mortgage options with a specialist adviser who will help you reach a decision on the type of mortgage for you based on your individual circumstances.

Check out the age limits

Mortgage lenders have to advertise the minimum and maximum age for which they will accept mortgage applications. These ages apply to either the age at the time of application or the maximum age a borrower must be at the end of the mortgage term.

Whilst age restrictions apply, the final decision to lend will always be at the lender's discretion.

For example, Shepshed Building Society offers a two-year fixed rate mortgage at 4.24% to borrowers aged up to 85. This is not necessarily a guarantee that an applicant aged 80 will definitely be approved though.

On the other hand, if you are approved at the age of 80 you will have just five years to repay the mortgage.

Mortgage terms

Due to the increased risk of lending to an older borrower, the term of the mortgage will often be decided by the lender. Whilst lenders tend to vary in their terms and conditions, it is unlikely that an applicant aged 70 would be accepted for a mortgage term of ten years or more.

Funding a mortgage in retirement

Even though you may have funds to meet the monthly repayments, in a savings account for example, lenders will want to be sure that the mortgage is affordable upon application and in the future. Generally speaking, most lenders will want the mortgage to be funded by regular, earned income.

Lenders will take into consideration all sources of income, such as pensions and other investments to ascertain whether the loan is secure. Remember that, essentially, the mortgage lender needs conformation that the loan can be repaid each month and if not, that there is enough security in the property to recover the money back.

Having a younger relative or friend acting as a guarantor is another alternative when funding a mortgage in retirement. If you are unable to make repayments, for whatever reason, the guarantor can make the repayments instead.

As with any mortgage application, any marks on your credit history will affect the underwriter's final decision.

What Next?

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Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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