When you find yourself on the wrong side of 50, mortgage options can potentially dwindle.
Of course, it’s not like you can’t get a mortgage when you’re approaching retirement age. However, it can be a tough process as many lenders impose age limits on borrowing and using your earned income etc…
Then again, some lenders specialise in retirement mortgages, and they might be more suitable for you.
In this guide, we will look at what is the maximum age for mortgage in the UK and understand how you can improve your chances of getting approved.
Let’s dive right in!
Table of Contents
What Is The Maximum Legal Age For Taking A Mortgage?
Long story short, there isn’t one.
Legally, your age shouldn’t factor in your ability to take a mortgage, provided you can repay the loan/meet the lenders criteria. However, lenders can impose their own age limits for certain types of mortgages.
For instance, most lenders will require that the maximum age at the end of the mortgage term should be 70 or your retirement age – whichever is sooner.
Why is this? Put simply, as you age, your ability to work decreases, and your health might also take a turn for the worst.
And if you’re already retired, then your only source of income might be your pension. This impacts your ability to pay back the loan on the affordability assessment.
Further, since a mortgage is a long-term commitment, the borrower must remain alive and well to pay it back.
Usually, mortgages are taken for a term of 25-30 years, and the lesser the borrower’s age, the greater the probability that they’ll be around to pay it back put simply.
Depending on these factors, a 30-year-old may find it much easier to get a mortgage than a 70-year-old individual.
But if you’re hale and hearty even at an advanced age and have a good income, you shouldn’t face too much trouble getting a mortgage approved also.
How Does DTI Factor Into The Equation?
Along with your age and health, another factor that ties into whether you’ll get approved for a mortgage at an advanced age is your DTI, or debt-to-income ratio.
This is calculated by dividing your monthly outgoings (in terms of credit commitments) by your gross income per month.
Based on this, the loan amount that you get finally is usually anywhere between 3 to 4.5 times your annual income.
However, this might change based on your other assets/circumstances, if any.
Maximum Term Length For Older Borrowers
Most lenders in the UK usually have a maximum age limit of 65-70 years when applying for a new mortgage application and a maximum age of 80-85 for paying it back (end term).
This means that instead of a term of 25 years or more, older borrowers have to contend with a shorter payback period which will make a difference for the maximum borrowing on the application.
However, if you have a good mortgage broker to help you, they might be able to negotiate on your behalf and get a good deal with a longer term based on your circumstances.
Also, another factor to consider here is that interest rates will usually be higher the older you are when taking the mortgage because you need to approach more specialised lenders who cater to your specific criteria.
Factors To Keep In Mind For Increasing Eligibility
Apart from the above mentioned points, there are a few other factors that you should keep in mind for enhancing eligibility:
- Ensure your financial records are spotless and that you pay back bills on time.
- Always make sure your credit report is updated, and there are no mistakes.
- You can consider applying for a mortgage jointly to enhance eligibility.
- Try not to take any new loans during the mortgage application process.
Mortgage Options Available for Seniors in The UK
If you’re a senior borrower, then you can take out fixed-rate and variable-rate mortgages.
You might also consider RIO mortgages and lifetime mortgages, which allow you to access equity tied up in your property.
Frequently Asked Questions (FAQs)
1. Will I need a proof-of-income document for getting a mortgage at a later age?
No matter your age, proof of income documents are essential for getting a mortgage. This can include documents such as pension and investment statements.
2. What happens if I can’t repay my mortgage before reaching the maximum age set by the lender?
In such a case, you need to talk with your lender, explain the situation and try to get an extension on the repayment term and solution to the problem.
Please bear in mind this article is for information purposes only and any advice surrounding equity release products will need to be given by an advisor who holds the relevant qualification with the FCA.
Your home may be repossessed if you do not keep up repayments on your mortgage.
All content is written by qualified mortgage advisors to provide current, reliable and accurate mortgage information. The information on this website is not specific for each individual reader and therefore does not constitute financial advice.
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