Getting A Mortgage When Youre Older
Getting a mortgage when youre older is gradually becoming easier as the UK mortgage market adapts to an ageing population that is retiring later in life.
Thanks to high property prices and rising student debt, many people are buying their first home much later in life. Increasing numbers also want mortgage terms that last longer than the traditional 25 years. When taken together, these trends mean that more people will be in their 60s, 70s or even 80s before repaying their mortgage.
This guide highlights which lenders have the highest mortgage age limits, explains how to increase your chances of getting a mortgage as an older borrower, and offers some alternative options to consider.
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In assessing your requirements, we do not use credit scoring and we can provide an accurate estimate of the amount of borrowing and the viability of your requirements, without effecting your credit score.
We avoid credit searches at the initial stages given that numerous credit searches will impact your ability to access cheap credit. It is clear that too many credit applications in a short period of time will impact your score and whilst it is important to shop around, formal applications for a mortgage can trigger rejections, as it gives the impression you may be desperate for credit. It is essential when making enquiries for any financial product, that the Company does not credit score you, until such time as you have agreed to make a formal application.
We can indicate your chances of approval prior to any application being made and where necessary, can obtain decisions in principle from lenders who do not use credit scoring.
Clients we assist tell us from the outset, they would like a guarantee of the amount they can borrow and our knowledge of specific underwriting policies within lenders, allows us to accurately estimate, exactly what is available.
Importantly an initial discussion and agreement through us, does not impact your credit score
Were not tied to one lender so you can be sure well get the best deal for you, from the bank or building society right for you.
We seek to ensure the best possible results for those who choose to use us.
Can I Port My Mortgage If I Move Home
means taking it with you when you move house. Technically, this is a new loan so youd need to reapply – and if youre over 50, this might not be straightforward.
If your lenders eligibility criteria has changed theyve lowered their age cap, for example or if youre approaching retirement and your income is going to fall, you could be turned down.
But porting your mortgage may not be the best option in any case. It may be better to switch to a different lender or to take out a new deal with your current lender. So its worth checking out all your options.
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If Youre Looking For A Mortgage Adviser Who Takes The Time To Get To Know You And Where You Are In Life Youve Come To The Right Place
Choosing the right mortgage for you can be really challenging. At Private Wealth Mortgages, our expert advisers guide you through the entire process and will find the best deal for your circumstances.
How much deposit is required for a buy to let retirement mortgage?
For a buy to let retirement mortgage, you will need a minimum deposit of at least 20% of the value of the property, but this will be dependent on your current and future income levels and expected rental income. It can vary between 20-40% depending on the terms.
Is there an age limit on buying a house?
There is no upper age limit on buying a house, but should you need to borrow, the terms of your mortgage will need to consider your personal and financial circumstances and are subject to differing criteria. There is however a lower age limit on buying a house you do need to be 18 years old or above.
Can I get a mortgage at 58?
Yes, you can, and whats more, there are several options that we can look at that would best suit you based on your current situation, whether you are 58 or 78. There are a variety of interest only retirement mortgages and lifetime mortgages available to you that are based on your property value or your retirement income and can run for a fixed number of years, or your lifetime.
Am I too old to apply for a mortgage?
Can over 60s get a mortgage?
Can a senior citizen get a mortgage?
How Does The Lender Get Their Money Back
When a lender sets up a mortgage for a retired person, a senior or anyone. The first thing they receive are the principle and interest payments. Eventually, the home will be sold and the full mortgage balance will be paid off.
A lender doesn’t necessarily want you to pay off the mortgage. They are in the business of making a return on the money they lend out.
When a retired person gets a mortgage, the lender will receive the mortgage payments . Or, in the case of a home equity line of credit, interest only. The lender has the home as collateral. They are happy to receive a monthly income in the form or interest.
A retired person could pay off the mortgage by selling the home. A retired person could pay off the home with cash if they have it.
If you are retired and live in your home until you pass away and still have a mortgage, then your estate will make the payments on the mortgage until the home is sold. Either way, the bank will eventually receive their money back.
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Older Peoples Shared Ownership
The Older Peoples Shared Ownership scheme could be worth considering if you wantto downsize or your home is no longer suitable.
The scheme runs in England and is available for those over the age of 55 who are unable to purchase a home that fits their needs without assistance.
The scheme works in a similar way to the standard shared ownership scheme and allows you to buy any home thats for sale on a shared-ownership basis .
Through OPSO you can buy a share of between 10% and 75% of the homes value and pay rent on the remaining share.
You can buy more shares in your home as and when you can afford to, but unlike the standard shared ownership scheme, you can only buy up to 75% of the home. Once you own 75%, you wont have to pay rent on the remaining share.
To qualify, your household must earn no more than £80,000 a year if you live outside London and no more than £90,000 if you live in London.
Will I Be Able To Pay For A Mortgage If I’m Retired
The difference between applying for a mortgage when youre 70 compared to when youre younger is that your income may not be as regular. If youve stopped working for example, or if you become ill and need to start paying for care.
However, were all living and working longer these days and lenders are recognising this by adding more mortgage deals to the market.
Essentially, they want you to be able to show you have the money to make monthly payments, both now and until the mortgage is cleared.
It might be possible to have a younger guarantor, such as a child, added to your mortgage. This means if for some reason you are unable to make the repayments, they would be able to cover them.
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What Types Of Mortgage Are Available To Me
As an older borrower, there are three mortgage types that you can choose from: a standard mortgage, an equity release scheme or a retirement interest only mortgage, which is a hybrid of the previous two.
Youll want to discuss your retirement and mortgage options with a specialist adviser who will help you reach a decision on the type of mortgage for you based on your individual circumstances, but to help inform your decision, heres a quick overview of what each option could involve.
Is It Easy For A Pensioner To Get A Mortgage
For most pensioners, the short answer is no. Lenders will want to know that you will have a steady income stream to make all your repayments, which can be difficult to prove if youre over 65 and soon to be a pensioner but it is possible. You will need to show that your pension pot or other investments will be able to fund the repayments, and it can help to provide a well-estimated retirement date.
In fact, some providers will request the current value of your pension pot. You can show them your workplace pension forecast, annuity statement or bank statement .
Lenders will also want to know that you have a good credit history. It is important to check your credit score before you apply for a mortgage to see if there are any areas you can improve.
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What Kind Of Mortgage Is Available
There are 3 main types of mortgage to choose from
A standard mortgage
A Retirement Interest Only mortgage
An equity release scheme
Depending on your circumstances, it may be better to use a specialist broker rather than going directly to a lender to apply. Here we explain a little more on each of these three options.
You can choose from a repayment mortgage or an interest only mortgage. A standard repayment mortgage works by you paying back part of the loan each month along with an interest charge. As you pay it off, the overall amount falls until the mortgage has been paid off.
An interest only mortgage requires you to just make interest payments on a monthly basis.
At the end of the mortgage term youll be required to make a lump sum payment. These are less common for older borrowers and they will need to show proof of being able to make the final payment if they do take one out.
There is also an option over choosing a fixed rate mortgage or a variable rate mortgage. The fixed rate mortgage does what it says on the tin and you pay a fixed amount each month which doesnt change.
If its a variable rate mortgage, the amount may change because it is linked to the Bank of England interest rate. Therefore, if this goes up or down, you could end up paying a different amount.
Retirement Interest Only Mortgage
Retirement interest only mortgages are for older borrowers who want to release equity from their home or those who want to combine saving for retirement.
Start With Your Current Lender
You may have an increased chance of getting approved for a refinance with your current lender since they will already know the details of your loan. Your lender may be able to suggest different refinance programs for seniors that youll easily qualify for and may even be able to loosen the requirements to refinance .
Include All Your Income
Your lender will ask you questions about your income and assets when you apply for a new mortgage or a mortgage refinance. However, lenders dont only consider income from employment when they review your application. Maximize your chances of getting approved by including all streams of income with your application. Some sources of income your lender might consider include:
- Social Security payments
- Dividends from stocks and other investments
- Alimony payments
- Military pension payments and benefits
- Income from rental properties you own
- Payments from your IRA, 401 or other retirement accounts
- Royalty income from patents
The specific streams of income you can include in your application can vary from lender to lender. The most important factor is that the income you have will continue to come in throughout your retirement. Your lender may exclude certain streams of income that arent long-standing. For example, your lender probably wont consider alimony as income if its set to end in 12 months.
Is There A Minimum Age To Get A Mortgage
When you buy a home, youre entering into a legally binding agreement with a mortgage lender that outlines the terms of the property purchase. You must meet your states age of majority or the legal contract age to get a mortgage.
In most states, 18 is the minimum age required to buy a home, Leyrer said.
Still, young, aspiring homebuyers tend to face several challenges when applying for a mortgage even after turning 18. One of the biggest obstacles? Affordability.
About 58% of new and existing homes sold during the fourth quarter of 2020 were affordable to families earning an adjusted U.S. median income of $72,900, according to the February 2021 Housing Opportunity Index from the National Association of Home Builders and Wells Fargo.
Younger buyers also struggle with meeting credit requirements, simply because they often dont have enough experience with financial products, such as an auto loan or credit card, Leyrer said.
While you can still get a mortgage without a credit score, theres a catch.
You end up paying more people dont realize that, Leyrer said. Theres no way to gauge whether or not youll pay in the future.
Another recurring issue is not having enough money for a down payment, closing costs and related homebuying expenses.
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The Bottom Line: Its All About Your Finances
Managing loans on a fixed income as a senior citizen can be challenging, but it isnt impossible. Looking into senior refinance programs can help you save money in the long run. Before you start looking at different home loans for seniors, consider your finances and your long-term goals. If youre planning on staying in your home, refinancing may be a great choice.
Ready to explore your mortgage options? Start your refinance or mortgage application online now.
Consolidate debt with a cash-out refinance.
Your home equity could help you save money.
How Do I Qualify If I’m Retired
The qualifying criteria are the same whether you are employed or retired. Your lender will look at your credit. They will review your income. The lender will complete an appraisal to determine how much your home is worth.
If you are purchasing a home, then they will complete an appraisal on the home you plan to buy.
When you were an employee, you could get an employment letter and pay stub to confirm your income. As a retiree, you will be receiving pension income. The lender will ask for a copy of your bank statements for 3 months to confirm the pension income you receive. The lender will also ask for the last few years T-slips and Notice of Assessments.
Provided your credit is good, you will qualify for a mortgage or home equity line of credit with a bank or trust company or credit union. The amount you qualify for will depend on your pension income. Lenders will allow up to 39% of your income to be used toward your housing costs.
Your housing costs include the mortgage payment, property tax payment, condo fees plus the cost of heating your home.
Lenders also calculate how much you qualify for based on your total debt payments including your housing costs. All your monthly obligations can not exceed 44% of your gross annual income .
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How Do I Confirm My Pension Income
When you are retired you will likely receive your income from several sources. You could receive several pension incomes, CPP , OAS , RIF , etc.
To verify these sources of income, a lender will ask for documents to confirm the numbers. They will ask for documents like these to confirm income:
- 3-months bank statements
- 2-years T-slips
- 2-years Notice of Assessments
If you have a large Registered Savings Plan that you are drawing income from, then your lender will ask for this as well.
All these documents will be reviewed by your lender and then used to determine the total mortgage you could qualify for. In some cases, if your investment portfolio is large, they will make exceptions to the 39% & 44% that I mentioned above.
For some lenders, depending on how much money you have down you may qualify for higher mortgage amounts. For example, if you have 50% down when you purchase a home, the lender can be more lenient with the 39% and 44% calculations.
Mortgages For Over 70’s
In the current climate, it is a challenge to secure the most competitive mortgages, particularly if youre a pensioner. A number of lenders restrict the best deals to certain age groups, but there remains some good options out there. Typically we assist clients over the age of 70 who have undertaken their homework and tell us of their frustration, given there a far fewer lenders and even less products. They may have been with their bank for many years, but they are refusing to lend. They say they are surprised, sometimes annoyed, that despite having a good deposit or equity in their home, guaranteed income in pensions, they are struggling to finance, solely due to their age.
It is true, that mortgage lending criteria on a borrowers age, their income and even the type of mortgage, such as repayment and interest only has all severely tightened.
At age 74 the mortgage must have been difficult, but it went through more smoothly than any other mortgage.Rex Harris, Edgware There remains however a good number of long established lenders willing to provide competitive rates to more mature borrowers, deeming them to be a far lower lending risk.
As you would expect with an award winning company, all our finance is arranged through fully authorised, regulated mortgage lenders, whom can offer Capital Fortune, exclusive products and rates. Some are specifically designed for those aged over 70.
There are three stages to our award winning process: