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Mortgages for over 50s
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What is the age limit for getting a mortgage?
There is no universal age limit for getting a mortgage but each lender will normally impose their own age limit on deals. They can do this in a couple of ways:
An age limit for when you can take out a new mortgage (this can range from around 70-85 but may be less than that)
An age limit for when your mortgage term ends (this can range from around 75-95)
Some lenders don’t have any age restrictions on their mortgage deals at all, but this is quite unusual.
The reason that most lenders have some form of age restriction on their mortgages is that they want to make sure borrowers are able to repay their loan in full. As income becomes less reliable into retirement, they are more wary of lending to people over a certain age.
However, that doesn’t mean you can’t get a mortgage if you’re over 50 or even older. There are plenty of mortgages out there that will cater to you, and there are some specific products such as Lifetime Mortgages and Retirement Interest Only Mortgages that are specifically targeted at older borrowers.
Can I get a mortgage over 50?
Yes, in most cases you’ll be able to get a mortgage when you’re over 50.
Most lenders offer mortgage deals for borrowers in this age bracket, particularly if you’re still in full-time employment or receiving a steady income
However, as you get older and your income decreases, you’ll generally find the choice of deals available to you decreases.
The lender may also restrict the mortgage term as they may require you to repay the loan by a certain age.
For example, if you take out a mortgage at 55, you may only be offered a 20 year mortgage term if the lender would like the loan to be repaid by the time you’re 75. Shorter mortgage terms mean higher monthly payments.
How to get a mortgage for over 50s
If you’re applying for a mortgage when you’re over 50, lenders will look at the usual criteria:
Income
Credit history
Outgoings
Any debt
You’ll need to prove your income to a lender. If your mortgage term will extend into retirement, you’ll also need to provide evidence of what your retirement income will be, such as a pension forecast. Although if you’re still 10 years away from retiring, the lender may only require details of your current pension contributions.
If you’re looking for a mortgage in your fifties, it’s often best to seek expert advice from a mortgage broker. This is because they know which banks or building societies are most likely to accept you based on your circumstances, and can help advise you on what documents you’ll need to provide to a lender.
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What type of mortgages are best for over 50s?
If you’re applying for a standard mortgage, you’ll have the choice between a fixed-rate mortgage or a variable-rate mortgage.
Fixed rate mortgages
A fixed rate mortgage means the interest rate you pay remains the same for a specific period of time. The most common are two-year fixed mortgages and five-year fixed mortgages, but you can get deals for 10 years or even longer.
The benefit of a fixed-rate mortgage is that you know exactly how much you’ll pay every month for the duration of the deal, making budgeting much easier. However, the downside is that, if interest rates fall, you won’t benefit from lower repayments.
Variable rate mortgage
With a variable rate mortgage, your rate is subject to change during the length of the deal. Variable rate mortgages often have lower rates than a fixed-rate mortgage at first, but if rates rise it could become much more expensive so you need to make sure you could afford the repayments if this were to happen.
Tracker mortgages and discount mortgages are two of the main types of variable rate mortgage.
Tracker mortgages
A tracker mortgage rate is pegged at a certain amount above an external financial indicator, normally the Bank of England base rate. If the base rate rises, your mortgage rate will rise by the same amount. If it falls, then your rate does too.
However, some tracker mortgages have a ‘floors’, which means your mortgage rate will never fall below a certain level even if the base rate does.
Discount mortgages
A discount mortgage rate is set at a certain amount below the lender’s standard variable rate (SVR), and rises and falls alongside it.
The SVR is the rate you’ll come onto once your introductory deal ends unless you remortgage (which most people do as it’s normally more expensive).
How to improve your chances of getting a mortgage over 50?
Getting a mortgage over 50 might be a bit more difficult compared to when you were younger, but there are plenty of deals out there.
To increase your chance of getting accepted you should:
Be prepared to evidence that you can afford to pay off the loan, whether that’s with your salary, your retirement income or both. Lenders may be concerned about you being able to afford the repayments into retirement so you need to show that you have a plan in place to repay the full mortgage.
Review your spending. Lenders will look at your outgoings so it’s wise to check your spending habits and cut back where possible three to six months before applying.
Know your credit score. Check your credit score and history, and if there are any issues or mistakes, resolve them before applying.
Try to pay off any debts. If you have any other debts or loans, lenders will take these into consideration so try to pay them off or reduce them.
Speak to a mortgage broker. An expert is best-placed to advise you on which lenders are most likely willing to accept you based on your circumstances.
Can I get equity release as an older borrower?
Yes, equity release may certainly be an option for you. Equity release allows you to free up equity in your home to get a tax-free sum of cash, which you could use for supporting your retirement or helping out loved ones. However, there are risks associated with equity release so make sure to speak to an expert to check if it's the right decision for you. There are two main types of equity release product – lifetime mortgages and home reversion plans.
Lifetime mortgages
With a lifetime mortgage, you take out a mortgage on your main home. You then receive either a cash lump sum or smaller payouts.
You can choose whether to make repayments or allow the interest to build up. The loan is repaid when you die or move into long-term care and the property is sold. However, you’ll continue to own the property until this point.
Usually you need to be at least 55 to get a lifetime mortgage, and there are other criteria involved so make sure to do your research to check if it's the right option for you.
Home reversion plan
With a home reversion plan, you sell all or part of your home in exchange for a one lump sum or smaller payments.
However, you can continue to live in your home until you die or move into long-term care.
Home reversion plans typically available to you once you’re around 65 or older.
Retirement Interest Only mortgages
If you’re looking to get a mortgage in retirement, a retirement interest only (RIO) mortgage may also be of interest. It’s a good option if you’re planning on downsizing or want to remortgage to pay off your existing mortgage.
It’s not an equity release product but it works similarly to the lifetime mortgage described above, in that you only pay off the loan when you move into long-term care or die and the property is sold.
However, unlike a lifetime mortgage, you do have to make the interest payments every month (much like a standard interest only mortgage).
This can be a good option for a mortgage in retirement as it means your monthly payments will be more manageable. In order to be eligible, you need to:
Be 55 or older
Be a homeowner
Have a certain level of equity in your home
Prove that your retirement income covers the interest-only repayments
Claire Flynn, Senior Content Editor - MortgagesIt can be harder to get a mortgage as you get closer to retirement, but there are plenty of deals out there if you're over 50. If the mortgage term runs into your retirement, just be prepared to provide evidence of your expected retirement income. ”
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