Reviewed by Steve Humphries, Proposition Director
While getting a mortgage at an older age may look different to getting a mortgage when you’re 30, it’s more than possible. In fact, some lenders don’t have age limits. However, you’ll still need to tick a few boxes, so let’s break down what’s involved, including what lenders want to see and what you need to know about getting a mortgage in later life.
What impacts mortgage eligibility for older borrowers?
There are several factors that play into mortgage eligibility, and some may have more of an impact than others, depending on your personal circumstances. There are also things you can do to improve your chances of getting a mortgage later in life.
Let’s break down what affects mortgage eligibility for older borrowers:
1. How your income affects your mortgage
One of the biggest challenges for older borrowers is usually a significant decrease in income after retirement. While pensions provide a source of income, they might not be enough to meet a lender’s affordability criteria. This may not be an issue depending on how much you need to borrow, and what you already have existing as equity. The type of mortgage you choose plays a part as well, as income doesn't matter with a lifetime mortgage.
2. Your health and your mortgage
Lenders may consider health factors when assessing mortgage applications, since one of the primary challenges in older borrowers could be the increased risk of health concerns. Because of this, some lenders may ask for medical assessments or health declarations for older applicants.
3. Working out your affordability
Showing your affordability is important for borrowers of all ages, but affordability may look a little different for older borrowers. If you’re choosing a standard residential mortgage or a retirement interest-only mortgage you’ll need to prove that you can afford your monthly repayments. This calculation will include your income, plus what your retirement income will be, as well as your debt-to-income ratio and monthly outgoings. From there, lenders will usually limit your loan at 3-4.5x your annual income, though your circumstances may increase or decrease this amount.
4. Does your term length matter
Some lenders have age limits for taking out a new mortgage because the term length would extend past the point where anyone could reasonably expect you to keep paying for a mortgage. While this seems like a blocker, it doesn’t have to be. Because most mortgages can be paid off from the sale of a property, more lenders are open to extending their age criteria as well as their term lengths.
You could take out a 25 year mortgage at 75 or a 35 year mortgage at 80! There’s more flexibility than you think, but this highlights the importance of mortgage advice.
A specialist adviser will know which lenders have more flexible terms and are open to negotiating on age and term lengths. This is also where having a lower loan-to-value ratio is important, as it could guarantee that you’ll at least sell the property for enough to cover the mortgage. Let’s talk more about what loan-to-value means.
5. What does loan-to-value mean?
Loan-to-value (LTV) is the amount of the mortgage compared to the value of the property. Let’s say your property is worth £200,000. If you took out a mortgage for £100,000, your LTV would be 50%.
If you were to sell the property, it’s highly unlikely that you wouldn’t get enough to cover the £100,000 mortgage, and you’d have time to pay off some of the capital if you’ve chosen a repayment mortgage, lowering the amount you owe.
A mortgage adviser will be able to tell you if your LTV is too high and if there is anything you can do to improve your chances of getting a mortgage approval.
Why advice is so important
No matter your age or situation in life, expert advice is always important when it comes to your mortgage. Our advisers are here to help and can design a tailored plan that suits your needs and lifestyle. Have a chat with us today to see what your options are to kickstart your homebuying journey.
Frequently asked questions
Yes, you can. If you match a lender's eligibility criteria you could get a mortgage, no matter your age. Each lender has their own age restrictions, and some have none.
The older you are, the more strict the lending criteria may be. While there will likely still be options for you, they may be fewer in number.
Not at all! In fact, if you get a 25 year mortgage when you're 50, your mortgage will end when you're 75. As long as your retirement income covers your payments, you could be eligible.
Later life mortgage options become available after the age of 50, so speak to an adviser if this is something you're considering.
Important information
Your home may be repossessed if you do not keep up repayments on your mortgage.
There may be a fee for mortgage advice. The actual amount you pay will depend on your circumstances. The fee is up to 1% but a typical fee is 0.3% of the amount borrowed.
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