If you’re an older borrower, you may feel nervous about taking out a new mortgage. Whether you’re still working or are interested in a mortgage during retirement, our guide covers the maximum age and eligibility criteria for a mortgage.
Why take out a mortgage at an older age?
There are many reasons to consider a new mortgage later in life or during retirement. For example, your current home may no longer suit your needs, and you may wish to downsize or move closer to family and friends.
Alternatively, you may be interested in remortgaging. This could happen if your current mortgage is nearing completion and you’d prefer to stay where you are rather than move elsewhere. You may also want to release equity from your property to buy a second home, fund your retirement or help a younger family member get on the housing ladder.
Why does age impact mortgage eligibility?
When assessing mortgage applications, banks and lenders evaluate each customer’s risk. This refers to the likelihood of repaying the mortgage and ensuring that the property retains its value.
While there is no standard mortgage age limit, it can be more challenging to secure approval for a mortgage as you get older. This is because:
• You’re more likely to enter retirement before paying off your mortgage
• Your income may decrease as you don’t have a regular salary due to retirement
• Lenders must evaluate your risk based on your pension or investments
What is the maximum age for a mortgage?
Each lender sets its own mortgage age limit. On average, the maximum age for taking out a mortgage ranges from 65 to 80. The typical maximum age for paying off a mortgage falls between 70 and 85.
If you have a strong credit history, a large pension or evidence of strong returns on investments (such as shares or properties), you could have a better chance of securing a mortgage.
Can I get a mortgage after I retire?
It’s possible to secure a mortgage after retirement, thanks to later-life mortgages. Lenders can be stricter when lending to older individuals, so the key is to show evidence of a steady and ongoing income through your pension (both private and state).
As long as you show you can afford the monthly repayments during your retirement years, lenders will be willing to offer mortgage options. You’ll also need to show your bank statements so lenders can assess your monthly expenses.
What is an interest-only retirement mortgage?
Retirement interest-only mortgages involve monthly repayments that cover only the interest on your mortgage. At the end of the term, you must repay the full loan amount as a lump sum. These mortgages are like standard interest-only mortgages and are often more suitable for older borrowers, although repayment mortgages are still the most common option.
There are some key differences between repayment, interest-only and retirement mortgages.
| Repayment mortgage | Interest-only mortgage | Retirement mortgage (interest-only) | |
| Monthly payment | A % of the mortgage loan and % of the interest |
A % of the interest |
A % of the interest |
| At the end of the mortgage term |
The entire loan and interest have been paid off |
The entire mortgage loan must be paid in full |
No fixed term, but the entire mortgage loan must be paid in full once you sell your home, move into residential care, or at the end of life. |
Specialist interest-only retirement mortgages have several benefits:
• You only need to prove you can afford the interest payments, not your income
• The loan term isn’t fixed (but you must pay off the mortgage in full once you sell your home, move into residential care or at the end of life)
• Some retirement mortgages allow you to pay off part of the loan, reducing the size of your final loan repayment
What lenders offer over 50s mortgages?
Over 70 lenders provide mortgages for people over 50, including major banks and building societies like:
• Barclays
• Halifax
• HSBC
• Lloyds
• Nationwide
• NatWest
• Santander
• Skipton Building Society
• Virgin Money
How to increase your chances of getting a mortgage over 50
To improve your chances of getting a mortgage after the age of 50, focus on the following steps:
1. Timely payments: Ensure you pay your bills promptly and avoid missing any monthly payments.
2. Financial prudence: Be mindful of your monthly spending habits.
3. Strong credit score: Maintain a robust credit score.
4. Review your credit report: Check for errors and rectify them promptly.
5. Save for a deposit: Having money set aside for a deposit demonstrates financial stability.
6. Prove regular income: Provide evidence of consistent income to lenders.
At David Wilson Homes, we have brand-new homes across the UK and fantastic offers for first-time buyers and growing families.
Call our Sales Advisers today to learn more.
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