What’s the maximum age for a mortgage in the UK? When it comes to taking out a mortgage in the UK, you might think a mortgage for over 60s may be difficult.
Would it surprise you to know that there is no set maximum age for a mortgage in the UK term to end.
However, it’s important to remember that all lenders will have their own criteria that borrowers must meet to qualify for a mortgage, and age can be one of these factors.
In this article, we will explore what criteria you will likely need to meet if you are looking to get a mortgage at an older age, and whether it’s possible to get a mortgage with a term that extends beyond your retirement age.
What is the maximum age?
As we said, there is no set maximum age limit for mortgages in the UK, as this can vary from lender to lender.
Some lenders may impose age limits on their mortgage products, which may typically require you to repay the loan before you reach a certain age, such as 70 or 75.
However, other lenders may not have any age limits at all, and will assess each application on a case-by-case basis.
Lenders that do impose age limits on their mortgages will do so to reduce their risk and ensure that borrowers can afford the repayments throughout the term of the loan.
The perception is that as people get older, their income may decrease, particularly if they are retired or approaching retirement age. This is seen as a risk to the lender because it can make it more difficult to keep up with mortgage repayments, and lenders will want to ensure that their borrowers are not defaulting on the loan.
Criteria for getting a mortgage at an older age
Whilst strictly there is no maximum age for a mortgage, if you are looking to take out a mortgage at an older age such as a mortgage for over 60s, there are several criteria that you will need to meet to qualify.
These include:
Income: Any lenders you apply with will want to see evidence that you have a reliable and sufficient income to afford the repayments on the mortgage. If you are retired, lenders may take into account your pension income, as well as any other sources of income such as rental income.
Frequency of payment: How often you receive your pension payments can make a difference with some lenders. In most cases, the more frequent your payments, the better. But sometimes, this can be out of your control, so it’s vital to deal with a lender who can work with your pension income schedule.
Credit history: As with any application, lenders will want to see evidence that you have a good credit history and a track record of making payments on time. If you have any outstanding debts or a poor credit history, this may affect your ability to get a mortgage. In this case it is always best to check your credit file before making an application to make sure everything is correct. Each lender may use a different credit checking service, so using something like Check My File to see all your credit reports in one place is useful.
Deposit: Again, as with any and all mortgage applications lenders will require you to have a deposit of at least 5-10% of the property’s value. The larger the deposit though, the more likely you are to be approved for a mortgage as the loan-to-value rate drops and also the risk on them.
Property type: Some lenders may have restrictions on the types of property that they will lend on, such as properties with short leases or those that are considered high-risk.
Term of the mortgage: The average length of a mortgage used to be around 25 years. However, that has changed to around 30 years. What does that mean for older borrowers? Lenders will want to ensure that the term of the mortgage is appropriate for your age and income, and that you will be able to repay the loan before reaching a certain age. That may mean it should be repaid the by between 75 and 95 years old. Therefore, you may have to accept a shorter mortgage term of perhaps 10 years rather than the standard 25 years but that does not mean 25 years is out of the question.
Can you get a term that extends beyond retirement age?
It is possible to get a mortgage with a term that extends beyond your retirement age, but as with everything, it will depend on a number of factors. Lenders will want to ensure that you will be able to afford the repayments throughout the term of the loan, even if your income will decrease in retirement.
One way to increase your chances of getting a mortgage with a term that extends beyond your retirement age is to demonstrate that you have sufficient retirement income to cover the repayments. This could include your pension income, any rental income, or other sources of income.
You may also be able to extend the term of your mortgage by opting for an interest-only mortgage. With an interest-only mortgage, you only pay the interest on the loan each month, rather than paying off the capital. This can reduce your monthly repayments, but you will need to have a plan in place to repay the capital at the end of the term, such as selling the property or using other assets.
Another option is to consider equity release, which allows you to release some of the equity in your property without selling it. This can provide you with a lump sum of cash or regular income to supplement your retirement income, but it can also reduce the equity in your property and affect any inheritance you may wish to leave to your loved ones.
Although there is strictly no maximum age for a mortgage in the UK, it can be a factor in mortgage lenders criteria, as lenders will want to ensure that borrowers can afford the repayments throughout the term of the loan, even if their income decreases in retirement. However, that doesn’t mean that a mortgage at an older age is not possible.
At the Online Morgage Guru we believe there is a solution for everyone, which is why we work with whole of market lenders and look beyond the tick boxes.
It’s important to carefully consider your options which is why we work with you to find the right and best options for you whatever your age.
Contact us today at Online Mortgage Guru on 0345 3669799 or email us via info@theonlinemortgageguru.co.uk and we will put you in touch with a suitable specialist to handle your enquiry with no obligation.
