Question: My wife and I are in our 50s and ready to purchase a home, but we’re facing difficulties because of our age. Is it true that mortgage brokers are hesitant to provide loans to older individuals?
Response: In light of the credit crunch and subsequent financial crisis, regulations were put in place to improve lending standards across the board. Among the areas that received particular attention in the Mortgage Market Review were mortgages for individuals nearing retirement age.
Ideally, it’s advisable to ensure that your mortgage is fully paid off before reaching retirement, as post-retirement income tends to be lower. Many lenders responded to this by tightening their criteria for older borrowers. While they may not have implemented specific age limits, they introduced maximum age restrictions for the end of the mortgage term. This meant that many individuals approaching the upper age limit faced limited options.
Fortunately, mortgage lenders have recognized the need for flexibility in navigating the needs of older homeowners who are financially capable of managing a mortgage. Some lenders now offer options for borrowers over 55, extending the maximum age limit to 80 or 85, and some even have no maximum age requirement at all. Specialist products, such as those offered by Marsden Building Society, cater specifically to this demographic, providing terms that go beyond the standard maximum age limit.
Additionally, a new type of product called the Retirement Interest Only (RIO) mortgage has been developed. This mortgage allows borrowers to repay only the interest and does not require a specified mortgage term. The loan is only repaid upon the sale of the property, death, or when the borrower moves into long-term care.
While age may be a limiting factor, lenders also assess affordability throughout the mortgage term. They consider not only current income but also projected pension income. The shorter the term of the mortgage, the higher the monthly payments will be, impacting affordability. Therefore, it is important to gather documentation on expected pension income to evidence long-term affordability.
For RIO mortgages, monthly interest payments are required, so lenders consider potential changes to income due to the death of a borrower. This assessment ensures that the mortgage remains affordable even in such circumstances, leading to some limitations on availability for certain borrowers.
Given your current level of income, it would be worthwhile to explore other options that may be limiting your choices. Building societies and specialist lenders, such as Leeds Building Society, Livemore, and Hodge, often have more flexible mortgage options for older borrowers, including RIO mortgages. These institutions may be able to provide solutions that suit your needs and circumstances.
I am more than willing to answer any further mortgage-related questions you may have. Simply email me at [email protected] with the subject line “Mortgage Help,” and remember to include as many details as possible. While I may not be able to respond to all messages or engage in private correspondence, I will do my best to address your questions in forthcoming columns. Please note that my responses do not constitute regulated financial advice.
Denial of responsibility! VigourTimes is an automatic aggregator of Global media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, and all materials to their authors. For any complaint, please reach us at – [email protected]. We will take necessary action within 24 hours.
