In times gone by it was hard to secure a mortgage in your 50s for a term that extended beyond the state pension age of 60 or 65 with many lenders fearing that, post retirement, the borrower may find it hard to maintain their mortgage payments. Fast forward to 2021 and the world is a different place.
As life expectancy has increased so too has the state pension age (and when you can obtain a state pension) which, in turn, has led to more and more people accepting, or making a conscious decision, to work longer, delay receiving their pension income and set their sights on living a long and fulfilling life well into old age. And lenders have responded to this.
Provided the borrower can demonstrate their ability to pay off their mortgage over time and provide all relevant information, such as evidence of pension or work income, savings, investments and any other assets – as well as responsible spending habits (as would be expected of any borrower), mortgages are available for borrowers well beyond the age of 50.
The mortgage repayment amounts you pay each month would, of course, depend on the amount borrowed, and over what term, as well as the deal you have secured. The shorter the term, usually the monthly repayments are higher but there are ways to overcome this. Some older borrowers, for example, could consider interest only mortgages whereby you only pay off the interest on the mortgage loan, which will significantly reduce the monthly payments being made each month. It would mean, however, that the loan amount remains unpaid during the term of the mortgage and would have to be paid back, in full, when the mortgage term comes to an end, when the borrower sells the property to move to a long term care home or when they die.
The popularity of interest only mortgage for older borrowers has been highlighted in recent research which stated that there are more retirement interest –only mortgage deals on offer than ever before (*) - geared mainly to those who have reached retirement age and which offer different repayment options.
Understandably older borrowers will also be subject to greater scrutiny about their health and, whilst most people are advised to have mortgage protection insurance in place, it may cost more to secure the insurance and should be considered as an ongoing additional cost alongside the mortgage repayments.
Overall if you are over 50 and worried about the prospect of gaining a mortgage, possibly for the first time, there is usually help available and products designed with older borrowers in mind. It is important, however, to gain the advice of a qualified financial adviser - ideally one that has access to products that are available from across the market (rather than from one lender) and who would be more easily able to identify lenders who specialise in helping older borrowers’.
Why not book an appointment today with Embrace Financial Services.
(*) Moneyfacts 2021