Although age is just a number, it can make a difference if you apply for a mortgage. You may not be able to get the loan that you desire if you are 55 years old or older and you are applying for a mortgage. If you are over 50, here’s how to get a mortgage.
Lenders often place upper age limits on mortgages so it may not be possible for anyone to obtain a mortgage. It is not uncommon to see a 65-70 age limit on new mortgages, or a 70-85 age limit on the mortgage repayments.
Because your income will likely drop, banks and building societies may be reluctant to approve loans beyond the age of retirement. This is despite the fact that there are many borrowers who will continue earning beyond retirement age to be able support a mortgage. They can also use income from savings or investments to offset this.
This is because if you are 50 and plan to retire at 60, it may be difficult to obtain a mortgage. If you are able to secure a mortgage, you might have to repay it by your 70th birthday. This will mean a 20-year term instead of the usual 25. It also means that monthly payments may be more costly, and your income could fall as you retire.
Smaller banks and building societies are more open to older borrowers. They will often lend to borrowers over 75 years old on a case by case basis. Market Harborough Building Society and Bath Building Society will lend to borrowers up to 85 years old. Leek United does not have such a limit.
A retirement interest-only mortgage is another option. A retirement interest-only mortgage, which is a home loan for older borrowers may not be able to obtain a conventional mortgage because of their age.
A mortgage broker is the best place to begin your search for a mortgage for over-50s. A mortgage broker will be able help you locate specific products for the over-55s market and they will be able tell you which banks and building societies are most likely to lend to older borrowers.
Standard mortgage products are also worth considering as you might be able to get one.
A clear plan for how you will repay the loan is one of the best ways to improve your chances of getting a mortgage. Understanding your monthly expenses and budget will help you determine how much you can afford.
Also, you should review your credit report and consider improving it before applying for a mortgage. This will increase your chances of approval.
In the same manner as if you were still working full-time, you will need to show that you have sufficient income to pay the repayments after retirement. Expect to provide bank statements, proof of pension payments or evidence that you receive a pension. To determine if you can borrow the amount that is affordable, your lender will look at your monthly expenses.
You will need to provide a statement that includes a forecast of your retirement income if you are less than a decade away from retirement. Lenders may not want to see if you have a pension or not if you are older than 10 years. Check your files if you have had multiple jobs in the past to verify that you have information about all the pension schemes you might have contributed to.
You will need to reapply for existing loans if you wish to port your mortgage. This means that you can take your mortgage with you when moving home. Your lender will reassess you as if it were your first loan application. You will also need to meet new affordability criteria. You could be rejected even if your financial situation is the same as when you applied for the loan. They will consider if you have a decrease in your income after retirement.
You may have noticed that your lender has lowered the upper age limit. This could mean that you might not be eligible for the mortgage term you desire. You may be required to pay early repayment fees if you are unable or unwilling to transfer your mortgage.
Don’t be discouraged if your mortgage application is denied. Even if you are turned down by one lender, it doesn’t mean other specialist and mainstream over-55s lenders will not lend to you. A lifetime mortgage is another option. This is a form of equity release that allows you to take out a long-term loan secured on your home. When you sell your house, you pay both the interest and the loan back. This loan is not the most affordable option, as the interest rate on it is usually much higher than on a regular mortgage loan.
A retirement interest-only mortgage is another option. You won’t have to pass the same affordability test. Only prove that you can repay the interest and not the capital.
Hi my name’s Jessica Anderson, blogger, gardener, mom and wife. Discover my world and the love and passion I have for life. Find out what I have discovered and maybe it might just help enrich your life somehow.Click to read on