Mortgages for Over 60s - Are They Still Available?
Due to the current financial climate lenders have been tightening up on lending criteria, rules and policies - and maximum age, unfortunately, is no exception.
The first frustration of individuals looking to obtain mortgages for over 60s is that they are often restricted with the length of the mortgage the majority of high street lenders will consider.
For example, Woolwich require their mortgages to end no later than an applicant's 70th birthday.
So the maximum length of the mortgage for someone aged 64 would be 5 years.
This short period may not be appropriate for some borrowers as they may require a longer period to pay the mortgage back.
Some lenders are more restrictive in that their maximum age is 65 at the end of the mortgage.
For those lenders who are prepared to offer mortgages over 70, a maximum age of no higher than 75 generally applies.
This coupled with many lenders only offering minimum mortgage terms of five years, can create huge obstacles when guaranteeing adequate income to cover the repayment of the mortgage in its entirety over a five year term.
Traditionally, mortgages are offered to individuals based on their ability to repay the loan through earned income who will be working regularly for the total duration of the mortgage.
This can be either from employment or self employment.
However when taking a mortgage over the age of 60, it is likely that the source of income could change from earned income, through employment or self employment, in the first few years of the mortgage to other forms of income following retirement such as an individual's pension, income from investments or other assets generating an income.
This immediately creates a much greater risk for the lender which can have a subsequent impact on the mortgage products available over the age of 60.
Given this risk, individuals over the age of 60 are generally frustrated to find the limitation on the types of fixed, tracker or discounted deals that are available.
This is often despite them having significant equity in their home.
Equity however does not produce a recurring income and it is income which pays the monthly mortgage payments, not the security within the property.
This is not always appreciated by maturer borrowers and frustration can often exist given the limited options available.
As an alternative, some individuals aged over 60 are turning to equity release in order to fund their purchase or remortgage.
This can be considered as an alternative for individuals who may not have sufficient income to meet standard mortgage payments.
However it is a complex area and professional advice is recommended.
The first frustration of individuals looking to obtain mortgages for over 60s is that they are often restricted with the length of the mortgage the majority of high street lenders will consider.
For example, Woolwich require their mortgages to end no later than an applicant's 70th birthday.
So the maximum length of the mortgage for someone aged 64 would be 5 years.
This short period may not be appropriate for some borrowers as they may require a longer period to pay the mortgage back.
Some lenders are more restrictive in that their maximum age is 65 at the end of the mortgage.
For those lenders who are prepared to offer mortgages over 70, a maximum age of no higher than 75 generally applies.
This coupled with many lenders only offering minimum mortgage terms of five years, can create huge obstacles when guaranteeing adequate income to cover the repayment of the mortgage in its entirety over a five year term.
Traditionally, mortgages are offered to individuals based on their ability to repay the loan through earned income who will be working regularly for the total duration of the mortgage.
This can be either from employment or self employment.
However when taking a mortgage over the age of 60, it is likely that the source of income could change from earned income, through employment or self employment, in the first few years of the mortgage to other forms of income following retirement such as an individual's pension, income from investments or other assets generating an income.
This immediately creates a much greater risk for the lender which can have a subsequent impact on the mortgage products available over the age of 60.
Given this risk, individuals over the age of 60 are generally frustrated to find the limitation on the types of fixed, tracker or discounted deals that are available.
This is often despite them having significant equity in their home.
Equity however does not produce a recurring income and it is income which pays the monthly mortgage payments, not the security within the property.
This is not always appreciated by maturer borrowers and frustration can often exist given the limited options available.
As an alternative, some individuals aged over 60 are turning to equity release in order to fund their purchase or remortgage.
This can be considered as an alternative for individuals who may not have sufficient income to meet standard mortgage payments.
However it is a complex area and professional advice is recommended.
Source...