As long as you are at least 55 years old, you may be eligible for any type or mortgage that is available. There are specialist mortgages available from some lenders for older borrowers.
Be careful before you secure any other debts against it. If you don’t make your mortgage repayments, your home might be taken by the bank.
Why would I need a mortgage to get my house in order?
There are several reasons why you might need a mortgage.
Buying a home. A mortgage loan is not necessary to buy your first home. Perhaps you’ve been renting for decades and are ready to move on.
Purchase an investment property. If you have spare capital and are looking to invest it, you could consider buying an investment property. This will provide you with ongoing rental income and capital gains.
You can buy a unit in a retirement village. A senior village may be a good option for you to retire in comfort. Be aware that lenders might not lend money to homes in elderly villages. This is because they may fear that the properties will be difficult to sell.
Is there a maximum age limit for mortgages?
No. The UK resident who is applying for a mortgage can apply at any age. Lenders are not allowed to discriminate against borrowers due to their age, according the 2010 Equality Act.
You could theoretically get mortgages regardless of age based on this law. But reality is quite different. Lenders are responsible for ensuring that applicants can afford mortgage repayments and do not experience financial hardship. Therefore, it will be harder for older applicants to get mortgage approvals.
The lender will doubt your ability to repay the loan in 25 years if you are 55 years of age.
Some restrictions have been placed on certain mortgage products due to the 2008 financial crash. This is why it’s important to check with your mortgage broker in order to determine which lenders are able and willing to lend you the right mortgage for your needs.
What should I do to obtain a mortgage if my age is over 55?
For those over 55 who are applying for a mortgage you will need to provide more details about your financial status than those younger borrowers. You are less likely to repay your loan if you are retired or near retirement.
Lenders will request detailed information regarding your employment and income from all sources. This is to minimize risk and satisfy their responsible lending obligations. It is also necessary to give information about your credit history, current expenses, and any outstanding debts.
What types of over 55s mortgage can I apply for?
If you’re older than 55 years, you may be eligible for any type of mortgage available, whether fixed rate, variable or interest only. You must also provide enough evidence to prove that you can repay the mortgage. Some lenders offer specialist mortgages to older borrowers.
Mortgage for life. A lifetime mortgage, which you can get once you reach 55, is a form or equity release. It is a mortgage that you secure on your property. You retain ownership. You can leave some of the property’s worth as an inheritance to your loved ones. When you die, or move into long term care, the loan amount and accrued interests are paid back.
Home reversion. This is a type of equity release except that you can sell your entire house to a home provider in exchange for a lump-sum or regular instalments. Home reversion lets you continue living in the home until you are able to do so rent-free. However, you must maintain the property and insure it. You can set aside a portion of your property to be used in the future, perhaps for inheritance. The percentage that you keep will not change regardless of property values unless you make additional cash releases. Your property is sold at the end of your plan and the proceeds of sale are divided according the remaining percentage.
Retirement interest only mortgage. These loans are similar to regular interest-only mortgages but the loan is typically repaid only when you die, move in long-term care or leave the house. These mortgages are available to all borrowers who can show that they can afford the monthly payments.
Housing ownership for persons with long-term disabilities (HOLD) If you have a permanent disability, this program is available to you. HOLD can only be applied for if the properties offered through other home ownership plans don’t suit your needs. For example, you may need a ground floor property to avoid climbing stairs.
Elderly people’s share ownership. You can receive assistance from a home ownership plan that is specifically designed for older persons if you are 55 years of age or older. The scheme works in the same manner as the general shared ownership plan, except you can only own 75%. After you have purchased 75% of the home, you will no longer be required to rent the rest.
How to compare mortgages
Interest rates. The most important element to compare is interest rates, as mortgages are the biggest expense. The lowest interest rate is the best for pensioners. This will allow you to save money.
Flexible mortgage. You need flexibility in your mortgage. This flexibility could include a flexible repayment schedule or the ability to make additional payments. Compare each loan to find out what flexibility it offers.
Eligibility requirements. You may need to meet some eligibility requirements to get a mortgage. You may need to have a steady source of income, good credit history, and other requirements. The eligibility requirements for mortgages may differ between different types of pensioners.
Fees and charges Many mortgages will require you to pay fees and charges. You can compare all fees and charges for each loan to find the best option. These may be ongoing fees or upfront fees.
Lender term. Every mortgage loan provided by lenders has a different loan term. Compare mortgage terms and find the best one to suit your needs.
Are I eligible for a mortgage even though I am on disability benefits?
Lenders generally consider disability benefits to qualify as income. A mortgage application for someone who receives disability benefits is treated the same way as one where they service their loan using other income.
The lender will examine your income support as a way to assess whether you are able to repay the loan comfortably.
Lenders will consider your application individually. Your income and ability to repay the loan will affect your eligibility.
A lender will also assess other factors, such as your age, assets, and debts on an individual basis.
Different lenders have different eligibility requirements. Therefore, it is best to speak with your mortgage broker or lender directly to determine if a mortgage would be suitable.
Mortgages for seniors: The pros and the cons
Pros
Provides funds for you when you need them. These mortgages are a way for pensioners to access the property market.
Extra benefits. Additional benefits: Some mortgages for pensioners offer additional benefits like low or no interest rates and flexible payment plans.
Cons
Higher interest rate. Equity release mortgages have higher interest rates than other mortgages.
Eligibilities. There may be strict eligibility requirements for certain mortgages.