Following recent news that there are many householders facing a shortfall on their interest only mortgage, perhaps the biggest worry is for those over the age of 55.
Having put no additional savings aside, and time dwindling away prior to retirement, householders on interest only mortgages that fall into this age bracket have good reason to be worried, as if they are unable to pay off their mortgage at the end of the term, they run the risk of losing their home.
By acting now many of them have a chance to change things around, and one of the ways to do this is by swapping to a repayment mortgage to make sure that the full capital as well as the interest is being paid off.
Obtaining a new mortgage past the age of 55 is certainly not out of the question, but there will be a few factors to take into consideration.
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What will my lender need to know?
Firstly the number of lenders that are prepared to lend you the money may be much more limited. You may find that your current lender is unable to provide a mortgage for over 55s so it may be that you need to shop around a little to find a provider that can.
As with all mortgages, whatever your age, the amount you’ll be able to borrow will depend on various factors including your current financial situation. The lenders will look at the amount of deposit you have, your current income and any other outstanding debt that you may have.
One of the most important things to a lender will be your ability to be able to pay back the mortgage and whether or not you are perceived to be a risk to them.
Of course, the older you become a much higher risk to the lender as there becomes less time for you to be able to pay off the mortgage.
With less time to make the repayments than someone twenty or thirty years younger, the lender will need to know that you will have a sufficient income in retirement to be able to make the repayments and cover the term of the mortgage.
You’ll be expected to have a regular form of income whether it is from your current job, or if you are retired, a sufficient pension to be able to cover the monthly payments.
If you own any other property outright then this could also work in your favour with your lender, as if you are unable to cover your current mortgage, you have other assets that could be used as payment.
If you are already of retirement age and require a mortgage, your lender may ask that you have someone to act as guarantor to cover your outstanding debt such as a younger family member with a regular income or other financial security.
Do I have any other options?
If you are worried about paying off your current interest-only mortgage, then you may want to look at other options to take.
Read our Blog: Do you have an interest-only mortgage?
What should I do next?
If you are over 55 and need to consider taking out a new mortgage then it’s always best to speak to someone for specialist advice in order to for you to choose the best solution for your individual circ*mstances.
You can speak to a qualified mortgage adviser for expert help and advice, with absolutely no obligation.
The above post is intended to be informative but does not constitute advice – financial, legal or otherwise. Any opinions given are the author’s own do not necessarily reflect the views of SO Media or the Mitchell Farrar Group.
THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
More from SoSmart Money
- Why borrowers should act now to avoid interest rate hikes
- Why your mortgage application may get rejected and what you can do to help
- Reasons why you could be a mortgage prisoner
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Liz says:
Enquiring about mortgages for + 55 s living in south of England some deposit but not huge would like some advice
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FAQs
Yes. There is no age limit to a mortgage application.
Can a 55 year old get a 30 year mortgage? ›
Mortgage lenders can't deny you a specific loan term on the basis of age. The loan term you're comfortable with has much more to do with your finances than your age.
Can I get a mortgage if I'm 55? ›
Most banks and building societies offer mortgages for people over the age of 50, including Nationwide, Lloyds, Halifax and NatWest. If you're in your early 50s and still in full-time employment, you're likely to have a good choice of deals – whether you're a first-time buyer or remortgaging your home.
What disqualifies you from getting a mortgage? ›
If the declination letter doesn't specify a reason, contact the lender to ask. Most often, loans are declined because of poor credit, insufficient income or an excessive debt-to-income ratio. Reviewing your credit report will help you identify what the issues were in your case.
Does age affect mortgage approval? ›
The analysis, which controls for a host of applicant, property, and loan characteristics, finds that rejection rates rise substantially with age. A potential explanation is mortality risk, which increases the likelihood of the loan being paid off early or entering foreclosure.
Can a 56 year old get a 30-year mortgage? ›
You Can Get a 30-year Mortgage at Any Age
You could be 99 years old and get a 30-year mortgage as long as you qualify. The lender may not deny a loan because they don't think you'll live long enough to pay it off. But the law addresses more than just the age at which you apply.
Can a 53 year old get a 30-year mortgage? ›
Age doesn't matter. Counterintuitive as it may sound, your loan application for a mortgage to be repaid over 30 years looks the same to lenders whether you are 90 years old or 40.
What is the oldest age you can get a mortgage? ›
Summary: maximum age limits for mortgages
Many lenders impose an age cap at 65 - 70, but will allow the mortgage to continue into retirement if affordability is sufficient. Lender choices become more limited, but some will cap at age 75 and a handful up to 80 if eligibility criteria are met.
Should a 50 year old get a 30 year mortgage? ›
These loans allow for lower monthly payments than shorter-term loans, which can make homeownership more affordable for a lot of people. But if you sign a 30-year mortgage in your 50s and you don't accelerate your payments, then you can pretty much bank on not paying off your home until you reach your 80s.
What is a 55 mortgage? ›
Proprietary reverse mortgage – This is a loan offered by a private reverse mortgage lender and not insured by the government. Some proprietary reverse mortgage options allow you to take out a loan at age 55, rather than age 62.
Several factors could keep you from getting a mortgage, including a low credit score or income, high debts, a spotty employment history and an insufficient down payment.
What 3 factors are considered in qualifying for a mortgage? ›
Let's begin by looking at the major factors lenders first consider when they decide whether you qualify for a mortgage. Your income, debt, credit score, assets and property type all play major roles in getting approved for a mortgage.
How difficult is it to get a mortgage now? ›
Mortgage lenders have become much stricter with their requirements, which makes it more difficult and confusing for buyers to qualify. In the past, borrowers could get approved with lower credit scores, but now they require at least a 700 credit score and a down payment of about 20%.
At what age will the bank not give you a mortgage? ›
The Equal Credit Opportunity Act (ECOA), which came out of the Civil Rights Act of 1964, says lenders cannot deny you credit based on age, as well as other criteria like race, color, religion, national origin, sex, or marital status.
At what age is it harder to get a mortgage? ›
The upshot is that if you're over the age of 62, you're almost 30% more likely to get rejected for a standard mortgage.
At what age do banks stop giving loans? ›
Generally, a creditor such as a lender or broker cannot use your age to make credit decisions. However, there are exceptions to this rule. For example, age can be considered in a valid credit scoring system. Even then, the credit scoring system may not disfavor applicants 62 years old or older.
Should a 50 year old get a 30-year mortgage? ›
These loans allow for lower monthly payments than shorter-term loans, which can make homeownership more affordable for a lot of people. But if you sign a 30-year mortgage in your 50s and you don't accelerate your payments, then you can pretty much bank on not paying off your home until you reach your 80s.
At what age do banks stop giving 30-year mortgages? ›
Don't worry about the lender. A standard rule of thumb applies, regardless of age: So long as your mortgage payments are no more than 45 percent of your gross income, you should be able to get the mortgage.
Do banks give 30-year mortgages to seniors? ›
There are plenty of home loan options available to retirees or seniors — mostly the same as for anyone, with one exception. Here are seven to consider: Conventional loan: You can find conventional mortgages from virtually every type of lender, in terms ranging from eight to 30 years.
Can a person in their 60s get a 30-year mortgage? ›
There is no official age limit for mortgages, but it is harder to get a standard mortgage when you near retirement. Some equity release products, where you use the value of your existing home to fund later life, have a minimum age limit.
Liz 