Mortgages for Older Borrowers: Explained

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It is commonly believed that older borrowers are unable to get a mortgage. However, although it can be harder, it doesn’t mean you won’t be able to find the right mortgage product for you. 

At Barlow Irvin, we have years of experience helping older borrowers to achieve their home owning goals and always strive to find the best possible solution for your specific needs. 

Key Points:

  • Older borrowers are typically considered as those aged 70 – 95
  • There are 5 main types of mortgages an older borrower could apply for 
  • A mortgage broker can guide you through the process to help ensure your application is successful 

Is it possible to get a mortgage as an older borrower?

Yes, it is possible to get a mortgage as an older borrower, but your options may be limited and the deals offered to you may be less competitive than those offered to  younger applicants. 

However, as long as your finances are in order and the house you are looking at is sound, you shouldn’t find too many issues with obtaining a mortgage. 

Why is it harder to get a mortgage as older borrowers?

As we’ve mentioned, it isn’t impossible to get a mortgage as an older borrower, but it can be harder. This is because you will be viewed as a higher risk applicant. 

Lenders will not only be checking that your savings and pension will be enough to cover the repayments, they will also be examining the length of the mortgage term they could offer you. For example, if you are over 70, you can usually expect to see a term length of 15 years with higher interest rates.

What mortgages are available for older borrowers?

If you aren’t able to obtain a standard mortgage or you don’t want to have a standard mortgage, there are other types that may be more suited to you. 

Older people’s shared ownership (OPSO)

This type of mortgage is available for those aged 55 and above and it enables you to buy a percentage of a property (usually between 25-75%) and pay subsidised rent to the house association for the rest. 75% is the highest percentage of the house you can buy with OPSO, compared to the 100% of the standard shared ownership scheme. 

Lifetime mortgage 

A lifetime mortgage is a type of equity release available for those over 55, where the mortgage is secured against your home. You wont make any repayments, but interest is still added onto the loan. When you move into care or you die, the whole amount including the interest will be paid off by selling the house. 

Retirement interest only mortgages 

Retirement Interest Only mortgages are also only available for those above 55 years of age. Your monthly repayments will only cover the interest and the loan will only be paid off when you move into care or die. 

Home reversion 

With this type of mortgage, you will sell a share in your property for a lump sum, but you’re able to live in it for as long as you like. However, this is an extremely expensive way to borrow and you won’t own your entire property. 

Can you get a buy-to-let mortgage as an older borrower?

Yes, you can get a buy-to-let mortgage as an older borrower. Most lenders have now set their maximum borrower ages to between 79-85 at the time of application. 

As long as you meet the lenders minimum requirements, you shouldn’t have too many setbacks with a buy-to-let mortgage since lenders rely on the rental coverage tests rather than a “backup income”. 

Advantages and disadvantages of a mortgage for older borrowers

Before you jump into getting a mortgage for older borrowers, you should be aware of the advantages and disadvantages. 

Retirement interest only mortgages 

Advantages:

  • Lending is available on an interest only basis, meaning the debt will not increase 
  • No end date on the term of the loan
  • Rates may be initially lower compared to lifetime mortgages

Disadvantages:

  • A monthly payment is required 
  • The terms of the loan must be renegotiated at the end if the 2/3/5 year period 
  • An affordability assessment is required 

Lifetime mortgages 

Advantages:

  • The rate is fixed for the lifetime of the borrower 
  • No income is required 
  • Credit history is not always taken into account 

Disadvantages:

  • Some plans have higher repayment charges if the mortgage is no longer required 
  • If the interest isn’t paid, it is compounded and the loan will increase in size over the term 

Lending restrictions for older or retired borrowers

Restrictions for elderly or retired borrowers will vary from lender to lender, and generally speaking, there are no universal set restrictions. 

However, as you age, lenders will become more wary of applications and may require more information on your pensions and savings to ensure you can afford the mortgage product you wish to purchase. 

How to get a mortgage as an older borrower

If you’re aged 70 or above and you’re thinking of getting a new mortgage, we can help. At Barlow Irvin, we have years of experience helping a wide range of different clients of all ages to successfully obtain the right mortgage for them. 
If you’d like to find out more about mortgages for older borrowers, or you’d like to discuss your options, contact our friendly team today for more information.

About the author 

The Barlow Irvin Team

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