You can get any type of mortgage if you are over 55, provided you can prove that you will be able repay it. Many lenders offer specialist mortgages to older borrowers.
Before you take out any other debts against the home, think carefully. If you fail to make your mortgage payments, your home could be taken away.
What are the reasons I might need a mortgage?
There are many reasons you may need to get a mortgage.
Buying a house. To be able to purchase your home, you don’t have to be young. You may be ready to make a permanent move after decades of renting.
Buy an investment property. An investment property can provide rental income as well as capital gains.
A retirement village. To provide a comfortable retirement, you may consider purchasing a unit in a senior village. You should know that lenders may not accept homes in older villages as security for loans due to concerns that these properties could be difficult to sell.
Is there an upper limit on the maximum age for mortgages?
No. No. There is no age limit on who can apply for a UK mortgage. The Equality Act of 2010 makes sure that lenders do not discriminate against borrowers based on their age.
This law alone would allow you to theoretically obtain a mortgage, regardless of your age. However, reality is a bit different. Lenders have the responsibility of approving mortgages only to those who are able to afford them without financial hardship. This means that older applicants will be more likely to get mortgage approvals than younger applicants.
If you are 55 years old and apply for a mortgage that has a 25 year loan term, the lender may be skeptical about your ability to repay the loan over the next 25 years.
Due to the 2008 financial crisis, banks and mortgage providers have been more prudent in lending. This has resulted in some age restrictions for certain mortgage products. It’s worth speaking with your mortgage broker about which lenders can offer you the best mortgages for your specific needs.
What are the steps to get a mortgage for someone over 55?
You will need to give more information about your financial situation if you are over 55. The less likely that you can repay all of the money borrowed if you are already retired or soon to retire.
A lender will require you to provide detailed information about your employment, income, and pensions in order to reduce risk. You will also need to provide information about your credit history, outstanding debts, and ongoing expenses.
What kinds of mortgages might be available for over-55s
You can get all types of mortgages if you are over 55, including fixed rate, variable, interest-only, offset account, and interest-only mortgages. As long as you have sufficient proof that you will be able repay the mortgage, you are eligible. There are specialist mortgages available for older borrowers from some lenders.
A lifetime mortgage. Once you turn 55, a lifetime mortgage is a form equity release. It’s a mortgage secured to your property. However, you still own the property. You have the option to leave a portion of the property’s value as an inheritance to your family. You are responsible for paying back the loan amount as well as any accrued interest when you die or move into long-term care.
Home reversion. This is also known as equity release. However, you will sell a portion or all of your home to a home-reversion provider in exchange for a lump sum of money or regular instalments. You can continue to live in your home until your death, rent-free, as long as you maintain it and insure it. A percentage of your property can be earmarked for future use, such as inheritance. Unless you take additional cash releases, the percentage you retain will remain the same regardless the property’s value. The plan ends and your property is sold. Proceeds from the sale are divided according to the remaining ownership percentage.
Retirement interest-only mortgage. These mortgages are very similar to traditional interest-only mortgages. However, the loan will usually be repaid only when the borrower dies, moves into long-term care, or sells the house. This type of mortgage is available to anyone who can prove they can afford the monthly interest payments. Although there is no minimum age requirement for eligibility, this mortgage is more suited to older borrowers.
HOLD: Home ownership for people with long-term disabilities (HOME). If you are a person with a long-term disability, this scheme is for you. HOLD is only available if you are unable to afford the homes offered by other home ownership programs.
The Shared Ownership Program for Older Persons. A home ownership program for seniors is available to those 55 years old and older. This works the same as the general share ownership scheme except that you can only purchase up to 75%. You don’t need to rent the remainder of your share once you have 75%.
How to compare mortgages
Interest rates. Because interest is the largest expense for mortgages, it’s important to compare interest rates. It is important for pensioners to search for the lowest interest rates because this will help them save money.
Flexibility in mortgage. Your mortgage should allow you flexibility. This could be in terms of flexible repayment plans or additional repayments. Compare the different loans to see how flexible they can be.
Eligibility requirements. Certain mortgages may require that you meet certain eligibility requirements in order to be eligible to borrow the mortgage. These could include regular income and a strong credit history. Particularly pensioners should look at the eligibility requirements for mortgages as some may be more suitable to apply for than others.
Fees and charges There are usually mandatory fees and charges associated with mortgages that you will have to pay. To save money, compare the fees and charges that each loan may have (these could be upfront fees or ongoing).
The loan term. Lenders will offer different lengths for each mortgage. Compare the terms of different mortgages and choose the one that best suits your needs.
If I receive a disability benefit, am I eligible to get a mortgage?
Most lenders consider disability benefits to be a valid source of income. A mortgage application from someone with disability benefits will be treated the same as an application to service their loan with another source of income.
Lenders will assess your income support to determine if you can comfortably repay the loan.
Lenders will typically review each case individually. The amount of income you have and the loan service that it can be used to pay your mortgage will determine whether or not you are eligible for a mortgage.
Lenders will assess your individual circumstances, including assets, age and debts.
Every lender has different eligibility criteria. It’s best to talk to your mortgage broker to find out if a mortgage is right for you.
The pros and cons of an over 55s mortgage
Pros
You have access to funds whenever you need them. These mortgages enable pensioners to get into the property market. They also give you the funds that you need when you need them.
Extra benefits. Certain mortgages are available to pensioners with additional benefits, such as low or zero interest rates, flexible payments plans and advance payment.
Cons
Higher interest rates. Higher interest rates are common for equity release mortgages than other mortgages.
Eligibilities. You may need to meet certain eligibility requirements for some mortgages.
