Tuesday, 9 August 2016

Am I still eligible to apply for MORTGAGE? Because I'm over 65

Mortgage Comparison

Securing a mortgage past retirement age is no easy feat - but it's not impossible. This excellent Mortgage Comparison guide will tell you how you can still apply for mortgage.

Many people head straight for their high-street bank and are shocked to discover they are "too old" for a loan.

In some cases, people in their 40s have been turned away - on the grounds that their mortgage term will take them past age 65.

But in practice banks and building societies have varying policies over who they are willing to lend to. What you need to know is the banks and building societies where you have a better chance of obtaining a loan.


Go to banks first, said Shaun Church of mortgage broker Private Finance, because while many are less inclined to lender to older borrowers, their rates currently include some of the best available.

Rock-bottom rates mean you can secure a rate close to 1pc or even below.

"If you can keep the loan 'mainstream' it’s always better to do that. Seek out the most cost-effective option first, and then look elsewhere if they won't lend to you," he said.

Metro Bank has no maximum age limit, but says it examines borrowers "on a case-by-case basis".

Santander will lend to age 75, so long as the loan has no interest-only element and the borrower's intended retirement age isn't before this. For interest-only they will not lend past 65.

Barclays will lend to 70 or the elected retirement age, whichever is sooner; and to retirement age only for interest-only mortgages. It will consider applications that go beyond intended retirement age, so long as borrowers show they can afford to continue paying after it extends into retirement.

HSBC will lend to a maximum age of 75. Again, they will only lend beyond intended retirement age if the borrower can demonstrate proof of income from sources such as investments or pensions.

Halifax will lend to 80, but will not lend past retirement age unless a borrower can provide proof of adequate retirement income.

TSB will lend to a maximum age of 75, but will ask for proof of retirement income when a loan goes past either predicted retirement age or age 70, whichever is sooner.

Scottish Widows will lend to 80, but will assess retirement income above either age 70 or expected retirement age, whichever is sooner.

NatWest and RBS will both lend to 70, but NatWest will look for proof of retirement income.

Building societies

These are generally more flexible, but rates tend to be higher.

This is generally because as rates have fallen, these mutual lenders have sought to protect savers - who outnumber borrowing customers substantially - and so borrowers' deals are sometimes less competitive.

Most building societies, including Saffron, Nottingham, Chelsea and Coventry will lend to at least age 75.

Nationwide recently changed its policy to allow some borrowers to have mortgages up to age 85. Its standard maximum age remains at 75.

However, applications can be accepted up to age 85 for borrowers who are already retired, with 40pc deposits, borrowing up to £150,000.

The applicant has to be 79 or younger at the time of application and only retirement income can be used when calculating affordability.

Ipswich Building Society will lend to those who are already retired up to the age of 85, as will other regional building societies including Kent Reliance and Mansfield.

Harpenden Building Society has a lifetime mortgage at 4.19pc, which is only available for customers aged over 65. It can be used as a remortgage or purchase.

It is different to equity release as it can be used to purchase property and interest does not roll up but is repaid.

The Family Building Society has no maximum age limit. It does ask for proof of income if the loan goes past retirement. Dudley Building Society and Cambridge Building Society also have no maximum age.

Brokers and private banks

If all other avenues have been exhausted, said Mr Church, a broker could introduce a borrower to a private bank.

This is normally only an option for wealthier individuals. The bank would design an investment plan for the individual, including a mortgage, which would often be without a set upper age limit.

This is often done for people who want to downsize.

“It’s really only accessible if they’re wealthy already and buying in affluent areas.

“Quite often they are downsizing, releasing some money, and they want to keep a bit of a mortgage on the new, smaller property because of inheritance tax planning,” he said.

Lifetime mortgages or equity release

Equity release has become increasingly popular both for those struggling to repay standard mortgages and borrowers using the extra cash to fund retirement or help children and grandchildren.

They are used only to extract money from an existing property, and cannot be used to buy a new one.

With a lifetime mortgage the term of the loan is the borrower's remaining lifespan, or until they go into long-term care. It should have a no negative equity guarantee, meaning the borrower cannot lose their home.

As a result affordability requirements are much less stringent and some older borrowers may find that equity release companies are the only ones willing to lend to them.

They have much higher interest rates than standard mortgages, and with many equity release plans the interest "rolls up" and is compounded, meaning the debt can end up being worth many times the original amount borrowed.

One company, Hodge Lifetime, specialises in lending to older borrowers and offers both repayment and lifetime mortgages.

As well as a equity release mortgage, it offers an interest-only mortgage for over-55s, which can last until the youngest borrower is 85 and can be used to buy or remortgage.

It also has a "hybrid" mortgage which can be either repaid or rolled up. Repayments must be made until the youngest borrower is 80, after which the interest can be rolled up.

The borrower's home can only be repossessed before they turn 80, or in the first five years of the loan, if this finishes after age 80.

The lowest rate available is 3.3pc. For comparison, typical equity release rates are closer to 5pc.



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