Is a Mortgage for Senior Borrowers, Now an Option?

- by Becky Hall

Are you a senior borrower looking to take out a mortgage? Guess what! Getting a mortgage for senior borrowers is now much easier due to recent changes. Read on with Cashfloat for more information on getting a mortgage for senior borrowers.

Mortgage for Senior Borrowers - You Can Get one Too! - Cashfloat explains
What is the maximum age for a mortgage?

The maximum age for taking out a mortgage is usually 65 to 80. The maximum age for when the mortgage ends is usually 70 to 85. There are some reasons why you may want to take out a mortgage in your older years, they can be:

  • If you want to remortgage your house, to get a better deal on your home.
  • If you want to move house, for example downsizing to a smaller home.

Read on to find out how recent changes have made it easier for older borrowers to get a mortgage.

In this article, we look at what reasons people have for taking out a mortgage at an older age. We also examine the reasons for changes made by the regulatory body. We will see the reasons for the lenders themselves changing, and what these changes entail. Finally, we explain the conditions of such mortgages, and how they work.

Why Take out a Mortgage at an Older Age?

Nationwide calculated that homeowners aged 55 or over possess property worth an estimated £1.8 trillion. However, it used to be difficult to access this capital without selling the property. With the rise in property prices, downsizing might not guarantee that they would have any cash afterwards. Plus, many older people are sentimentally attached to their home. They are reluctant to move as it holds so many memories of their marriage and children. Finally, they often have ties in the community. Therefore, they don’t want to uproot themselves and make a new start as they get older.

People remortgage at an older age often because they wish to help loved ones before they die. Most commonly, they want to help children or grandchildren get their feet on the property ladder. Over a third of first-time buyers (34%) are financially helped with their home purchase by family members or friends according to the Social Mobility Commission.

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Here is another common reason why older homeowners wish to release some of the capital from property. It is to help ensure a comfortable retirement. Some won’t be able to clear their mortgage before they retire. This is because they chose to take out an interest-only mortgage rather than a capital repayment mortgage. This is one of the key reasons why the FCA and lenders have changed existing rules. Let’s look at these changes in more depth.

What Changes have Made Mortgages for Older People Possible?

Taking Out a Mortgage after Middle Age

Apart from these modified age restrictions, there are also other conditions about:

  • the borrower’s health
  • passing affordability checks (including showing proof of a reliable income into pension age)
  • the size of the borrower’s equity which should usually be at least 40%

It’s quite possible for borrowers to continue paying off an interest-only mortgage until they sell their property. This would happen if ill health made it impossible for them to live independently, or they died.

How does a mortgage differ to a short term loan?

Short term loans are generally small loans which the customer pays up with in a few months. They usually range from £100 up to £2000. A mortgage is a much larger loan – like 6 figure amounts which is generally used to buy a house and the customer pays up over many years, for as long as 40 years.

Conclusion – Getting a Mortgage for Senior Borrowers

The FCA say there are 1.67 million outstanding interest-only mortgages in the UK due to reach maturity in the coming years (in 2020, 2027-8 and finally in 2032). These changes to the rules and lending criteria are offering a solution for those homeowners who either don’t have a repayment strategy or have underperforming investments. Relaxing the rules to allow those people to take out another mortgage has averted a potential crisis for homeowners, UK financial institutions and potentially the entire housing market.

For more information on getting a mortgage for senior borrowers, click here.

Maybe are you affected becasuse of comsumer credit under threat? Apply for a loan with Cashfloat

Maybe are you affected becasuse of comsumer credit under threat? Apply for a loan with Cashfloat

About The Author
Becky Hall
Becky never thought she would be a financial blogger. But Fate arranged that Becky had to put her accounting degree on the back burner right after she graduated with a first in Business and Accounting. While doing bookkeeping as a freelancer for private clients, Becky noticed how many cashflow problems can be solved with a little bit of education. Trying to keep her clients out of debt, Becky began writing resources which she distributed to clients. What began as writing advice for clients evolved into a passion and now Becky found her platform at Cashfloat. When she isn’t writing, calculating or budgeting, Becky can be found at her piano playing something classical.
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