Mortgages for over-65s: borrowers can get home loans up to age 85 — and beyond — with help from the experts

Homeowners in their forties and fifties can easily become trapped with expensive mortgages if they are refused a new deal because of their age.

Banks and building societies can be reluctant to approve home loans that may extend beyond retirement age when incomes are likely to drop. But there are plenty of borrowers who will earn enough these days — past the state retirement age — to support a mortgage, either through working longer or by using income from savings and investments. And there are many reasons why they might need to borrow much later in life.

Here we explore the problem and look at solutions.

WHY DO PEOPLE WANT TO BORROW LATER?

Long gone are the days when people aimed to pay off their mortgage by the time they were 50. People are taking longer to get on to the property ladder, while lifestyle changes, including divorce or the need to remortgage to release equity to help grown-up children or grandchildren on to the ladder, mean more people want to keep their loan going for longer.

Some might want to take on a bigger mortgage for a more expensive house, which may mean extending the term of the loan to make monthly repayments more affordable.

Others are sitting on their lenders’ standard variable rate, or SVR, to which mortgages revert at the end of a fixed-term deal, enjoying low repayments. However, they might want to lock into a fixed-rate loan to protect against a hike in monthly repayments, should interest rates look like they might move upwards.

There is also a group of borrowers who have been paying an interest-only mortgage for decades who won’t have the money to repay the loan, and will need to take out further borrowing.

MAXIMUM AGE LIMIT RULES

No matter what the reason for wanting to remortgage, the maximum age limits imposed by lenders can leave borrowers shut out of the market even when they can demonstrate good income.

Part of the problem is that lenders won’t use common sense, says Mark Harris, chief executive of mortgage broker SPF Private Clients.

“It is not inconceivable that a consultant, for example, could work into their eighties. A common-sense approach is required, something readily adopted by smaller building societies but not so much by the larger volume players.”

With mortgage rates at record lows, signing up to a new loan can save you money.

FLEXIBILITY IS OUT THERE

Some banks and building societies are becoming more flexible about lending to people into retirement.

David Hollingworth at L&C Mortgages says: “Older borrowers have found times tougher as lenders have imposed limits to the maximum age that a mortgage can be taken to, typically to 70 or 75.

"Yet as more of us live and work for longer lenders are increasingly accepting an anticipated retirement age of 70 where plausible.

"More lenders are beginning to stretch the maximum age as they recognise it may exclude borrowers who are perfectly able to take advantage of the low rates currently on offer.”

WHERE YOU CAN GO TO BORROW UP TO AGE 85 — AND BEYOND

Skipton edged the maximum age up to 80 to expand the range of options for older borrowers who can afford a mortgage.

Others who have relaxed their rules include Nationwide, which will lend to age 85, so up to age 55 you can still have a 30-year mortgage. Halifax will lend to the age of 80.

L&C’s David Hollingworth says: “Smaller building societies are often more flexible and many can consider lending up to 85, such as Market Harborough, Bath Building Society, Mansfield and even beyond. Leek United doesn’t have a maximum age at all.”

Adrian Anderson, director of mortgage broker Anderson Harris, says the challenger bank Metro is more switched on than the others.

“If you have unquestionable long-term ability to service and repay the loan through income from a buy-to-let property, investments, a pension or a trust, then Metro does not have a maximum age that the mortgage needs to be paid back by.”

The loans available to older borrowers are the same deals offered to those of any age. There are fees to factor in, and these can amount to about £1,000, but again, these are not dependent on age.

Hollingworth adds: “In some cases lenders have loans specifically for older borrowers which may be more expensive. So you need to shop around to make sure that you get the best rate possible.”

You can choose a fixed-rate mortgage, where monthly repayments are set in stone for a period, or a tracker loan which moves up or down with the Bank of England base rate. You will also need to go through affordability checks to ensure you can afford to make the monthly repayments. You will need to show proof of income and declare all outgoings, including any other debts.

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