mortgages for older homebuyers

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Mortgages for the Older Homebuyer

The introduction of new mortgage affordability rules last year restrict mortgage lenders lending unless they are certain that applicants are able to afford their mortgages even when interest rates start to rise. What does this mean for older buyers?


mortgages for older homebuyers
To get a mortgage older applicants have to prove their retirement income from state pension age, even if they are planning to continue working long past that time. Lenders will calculate whether you can afford your initial mortgage payments (often plus a 2% margin to account for rising rates) solely on your retirement income. As a result many over 50s are either unable to secure a mortgage or lenders will only agree to a much shorter term so that it is paid off before state pension age or even earlier depending on their criteria. So if you are planning to take out a mortgage in your fifties or later the term might have to be significantly shorter than you would like which will significantly increase your monthly payments. Securing the services of an independent mortgage broker can prove effective because they will know which lenders are more flexible and likely to be sympathetic to your cause. They also often have access to deals that might not be available direct.


mortgages for the older homebuyer

To maximize your chances of a successful application make sure that you can supply:

• Details of your expected retirement income
• Paperwork for any life assurance policies that will pay out in the event of your death (or the death of one or both of you if you are applying for a joint mortgage).

• Details of any debts such as personal loans or credit cards (minimize these as far as possible)
Some lenders may take account of expected salary if you are planning to work beyond retirement age but normally only if the type of work involved is not over physical. The recently appointed chairman of the Council of Mortgage Lenders, Moray McDonald gave hope that the position may improve for older homebuyers when she recently called on lenders to apply more freedom and less rigidity in their approach to more elderly applicants. Pointing out that by 2023 24% of all adults will be over 65 she urged members of her association to “crack” the problems of lending into retirement.Ross Altmann, the government’s older workers champion who will become a minister if the Conservatives are in power, also said that she will focus on the mortgage market issue.
If you are over 50, considering an application for a mortgage and would like more advice please contact us via our website or call us on 0118 327 1991.


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