Borrowing options when you're aged 50+
As you get closer to retirement getting a mortgage can become more difficult as a lot of lenders have upper age limits meaning that the end of your mortgage terms won't be able to go beyond this. Affordability rules can then become problematic. Here is how to find a new mortgage whether you want to move house or remortgage your current home. A 25 year mortgage at 50 may not be off the cards!
The short answer is yes, you can get a mortgage over 50. But, it depends which lenders are willing to lend to you. Expert mortgage advisers from Mortgage Advice Bureau will look at mortgages from 90 different lenders to offer the right advice for you.
The Mortgage Market review, introduced in 2014 means that lenders have a legal duty to demonstrate customers can meet their monthly mortgage repayments - both now and in the future. Each lender has a slightly different interpretation of the rules.
If you want to borrow money to repay in full then you have the option to take out a standard mortgage, with many lenders willing to lend even if you are already retired. You could also look at 'lifetime mortgages' which allow you to borrow and add some or all of the interest to the mortgage.
Lifetime mortgages will reduce the value of your estate and can affect your eligibility for means tested benefits.
Most lenders will have their own age limit for mortgages. A rough guide for taking out a mortgage is a maximum age of 65 - 80 and the age limit for when a mortgage would end would be between 70 and 85.
You could get up to 35 years on a mortgage for over 50s but this will depend on lenders and their specific affordability criteria as well as your credit score. Alternatively, a lifetime mortgage removes the need to negotiate this aspect. Again, a mortgage adviser will be able to let you know the options that will fit your circumstance.
To improve your chances of getting approved for the mortgage that you would like, bear in mind the following points.
- Have a clear plan of how you will pay the loan back including how much you can afford for your monthly payments. You could also think about whether you will be able to overpay at any time or pay off lump sums.
- Know how much you can afford – compare your monthly incoming finances to your monthly outgoings. See what your previous mortgage repayments have been and decide whether you would need the new payments to be lower or you could afford to pay more each month.
- Work on improving your credit score to the best it can be by making sure that you pay bills on time and demonstrate good use of credit. You can also dispute any inaccuracies on your credit report if you notice that there’s something that you don’t agree with on there.