It’s understandable to have some concerns about obtaining a mortgage when you’re over 50.
While it’s true that lenders become more cautious about repayment as retirement approaches, the lending landscape has evolved to accommodate the changing dynamics of our society.
With people living longer and choosing to work later in life, many lenders have become more flexible in their approach. They have extended their maximum mortgage age limits and are now open to lending to older borrowers. (not that 50 is old btw)
Can I get a mortgage when I’m over 50?
Yes. You should know that there are plenty of mortgage products available with your needs in mind.
It has been common for individuals in their 50s and 60s to remain on their lender’s Standard Variable Rate (SVR) because they believe that remortgaging may not be available to them due to their age.
In the past, lenders were often hesitant to provide mortgages to pensioners due to concerns about reduced income in retirement and the ability to meet future repayments.
Fortunately, the lending landscape has evolved positively in recent years and we now have later life mortgages.
Most lenders have significantly increased the age at which they impose lending restrictions. They now offer more flexibility, extending the maximum age they consider at the end of the mortgage term.
While some lenders may request details about your pension and impose restrictions on the maximum term, getting accepted for a mortgage at 50, or 55, should still be within your reach.
Which type of mortgage is best when you are over 50?
When it comes to finding the best mortgage for you as someone over 50, it’s important to consider your individual circumstances and your level of risk.
With interest rates showing an upward trend, you might lean towards a fixed-rate mortgage to provide protection. By opting for a fixed deal, you can safeguard yourself from potential future rate increases throughout the duration of your offer, granting you peace of mind.
Alternatively, if you’re open to (and financially capable of) managing fluctuating monthly repayments, a variable deal could be worth exploring. Initially, variable mortgages often offer lower interest rates compared to fixed-rate options. However, it’s important to note that the rate may rise significantly during the term of the deal.
Let’s explore some different types of mortgage interest rates:
Variable Rate Mortgages
With a variable-rate mortgage, the interest rate can change at the lender’s discretion and may not exactly mirror changes in the Bank of England base rate. As the rate can go up or down, your monthly repayments will vary, so it’s crucial to factor in this potential fluctuation when planning your budget.
Tracker Mortgages
Tracker mortgages align with a bank base rate, often the Bank of England base rate. As this fluctuates, your mortgage rate and monthly repayments will adjust accordingly. Some tracker mortgages may have a minimum “floor” or “collar” rate, ensuring that the rate won’t drop below a certain level, even if the base rate does.
Fixed Rate Mortgages
These mortgages maintain a consistent interest rate for a specific period, typically two, three, five, or even ten years. With a fixed rate, your monthly repayments will remain unchanged during this period, making budgeting more manageable and protecting you from potential rate hikes.
Discount Mortgages
Discounted-rate mortgages offer a percentage reduction off your lender’s standard variable rate (SVR) for a specific period, often two or five years. For instance, if the SVR is 4% and your mortgage has a 1.5% discount, your interest rate would be 2.5%. Keep in mind that the mortgage rate will rise and fall in line with changes to the lender’s SVR.
Repayment methods
Let’s not forget the repayment methods.
There’s only three to choose from, and each one will affect the amount you pay each month.
- Repayment: The most popular and most expensive but also the ‘safest’. You will pay off your mortgage with each monthly payment, until it is all gone.
- Interest only: The cheapest option (but maybe the least safe). You only pay the interest each month and need another way to pay the mortgage back at the end.
- Part and part: A combination of the other two, so you will still have a lump sum to repay at the end.
How do part repayment and part interest only mortgages work?
We take a look at what a part and part mortgage is, how it works and whether it could be the right option for you.
Can I change my interest-only mortgage to repayment?
In this article, we’ll go over everything you need to know about switching repayment methods.
How do you repay an interest only mortgage?
We take a look at interest only mortgages; how they work, who would want one and how you pay them back.
How much can you borrow?
Being over 50 shouldn’t affect how much you can borrow.
The good news is that the amount you can borrow depends on various factors, such as your financial situation, deposit size, and credit history. Keep in mind that a larger deposit and a strong credit score increase your chances of borrowing more, as you pose a lower risk to lenders.
Most providers use an income multiple of 4 to 4.5 times your gross salary/earnings to assess the amount they can lend you. Lenders also consider your monthly income and expenses when determining mortgage affordability. If you have significant outgoings then this can restrict the amount you can borrow.
If you anticipate retiring before your mortgage term ends, you’ll need to demonstrate your expected retirement income.
This situation is known as borrowing into retirement. Lenders want to ensure that you can comfortably manage monthly repayments once you no longer have a regular salary. Additional income sources like investments, shares, or buy-to-let property can also be considered.
While many lenders are open to offering 25-year mortgage terms to those over 50, some cases may require a shorter term. If a shorter term is necessary, it’s important to note that monthly repayments will be higher compared to a 25-year term. Therefore, you need to demonstrate that you can comfortably afford to repay the mortgage within the given time frame.
In the case of a joint mortgage application, lenders may request evidence of how you or your partner could afford the loan if one of you were to pass away.
Remember, each lender has different criteria and approaches, so it’s essential to consult with a mortgage adviser who can assess your specific situation and guide you towards the borrowing options available to you.
Loan to value
Your loan to value is a percentage figure that represents the amount of mortgage, compared to the property value.
It’s quite a simple calculation to do, but you may find it quicker to use our online loan to value calculator.
Around the ages of 50 to 55 you shouldn’t find too many issues with LTV. There should be options available around 90% LTV, where you have 10% equity or deposit. The best interest rates require a lower LTV figure, typically 75% and below.
What is the age limit for getting a mortgage?
While not all lenders have age limits, those that do typically have two approaches.
They either set a maximum age for applying and taking out a new mortgage or establish a maximum age for when the mortgage term should end.
For example, certain providers may not lend to individuals over the age of 70 to 85, while others require the loan to be paid off before reaching the age of 75 to 95.
It’s worth noting that some lenders have no age limits at all, although these are less common.
You will find more useful information in our article: Is a marathon mortgage right for you?
How does age affect mortgage eligibility?
As you approach retirement, lenders tend to become more cautious about your ability to repay the mortgage.
The shift from a regular salary to relying on pension income, can make it challenging for them to assess your financial stability accurately.
The length of time you plan to continue earning a full salary and your retirement plans can significantly impact your mortgage prospects.
For example, if you’re currently 50 and anticipate retiring at 70, it should be relatively straightforward to be accepted for a mortgage with a 20/25-year term. However, if you’re 55 and plan to retire at 60, lenders may feel more comfortable offering you a shorter mortgage term of 10 or 15 years.
The potential risks associated with health issues as you grow older are also considered by lenders, as they factor into your ability to manage repayments over a 25-year term.
Self-employed applicants
Self-employed individuals will have the same mortgage choices as someone who is employed.
When you’re looking to borrow into your retirement years, being self-employed has both advantages and disadvantages.
FOR: As a self-employed person you are in control of your destiny and how many hours a week you work. It is feasible that you may never fully retire, optionally reducing the amount of time you work. It would be more difficult for an employee to do this.
AGAINST: If your job involves physical work then it is unlikely you can maintain this when you are older. Lenders will recognise this when assessing borrowing into retirement.
How can I improve my chances of getting a mortgage over 50?
To increase your chances of obtaining a mortgage over 50, it’s important to demonstrate long-term affordability.
Showing that you will continue to earn a full salary or have sufficient retirement income to cover the repayments is essential. You can provide evidence through pension forecasts, investment income, or income from buy-to-let properties.
Gathering all the necessary information, such as your state pension entitlement and annuity statements, will help strengthen your case.
Reducing your debt-to-income ratio by paying off outstanding debts like credit cards and loans, as well as minimising your monthly expenses, can improve your overall financial profile. It’s also wise to review your credit report, which you can obtain for free from credit reference agencies. If you identify any errors, take steps to rectify them promptly.
Lastly, take the time to shop around and compare your options carefully.
Different lenders have varying degrees of flexibility, and their maximum age limits for mortgages may differ. Seek guidance from a broker who specialises in your specific situation, as they can help identify suitable deals tailored to your needs.
Borrowing into retirement
Applying for a mortgage in later life can be particularly challenging. In this guide we will outline the options and solutions available when you borrow into retirement.
Equity Release Guide
Over 55? Our complete guide to unlocking the cash from your home using an equity release plan.
Mortgage Broker Guide
In this guide we’ll take a look at what mortgage brokers do, how they can help you, how they get paid plus tips on how to find a good one.
Which lenders offer these mortgages?
You’ll be glad to know that the majority of banks and building societies are willing to offer mortgages to individuals in their 50’s. This means you’re unlikely to require the services of a specialist lender at this point. However, it’s important to note that different lenders may have varying terms regarding the repayment period, so it’s always wise to double-check.
| Lender | Max age at expiry |
|---|---|
| NatWest | 70 |
| HSBC | 75 |
| Santander | 75 |
| Halifax | 80 |
| Leeds | 85 |
| Hodge | 95 |
| Family BS | 95 |
The application process
The mortgage application process for individuals in their 50s is generally similar to that for younger age groups, such as those in their 20s, 30s, or 40s. Lenders will assess your ability to afford mortgage payments both presently and in the future.
However, for retired individuals, lenders may require additional documentation, such as evidence of pension contributions, as part of their affordability criteria. Some lenders are willing to lend to borrowers up to the age of 80 with pension income, while most extend their lending criteria up to age 75, depending on the occupation.
It’s important to note that if you have a manual job, there may be limitations on the number of lenders available to you, as some may consider the ability to continue working in later life. However, this does not mean that obtaining a mortgage is impossible; it may just require exploring different lenders and their specific criteria.
Ready to explore your options?
If you’re on the cusp of starting your mortgage journey and could use the guiding hand of a professional, don’t hesitate to reach out to a reputable mortgage broker.
They will make the process smoother and more profitable than going it alone. And remember, knowledge is power.
The more you know, the better decisions you can make. Keep reading, keep asking questions, and keep moving forward on your journey.
Find a mortgage broker
FREQUENTLY ASKED QUESTIONS
Can I get a buy-to-let mortgage if I’m over 55?
Yes, there are a good number of options available. In fact, some lenders have higher maximum age limits for buy-to-let mortgages compared to residential ones.
What is the oldest age to get a mortgage?
The maximum age for getting a mortgage varies depending on the lender, typically falling within the range of 70 to 95 years old. It’s important to note that some lenders, such as Loughborough, Suffolk, and Cambridge building societies, have no upper age limit, offering more flexibility for borrowers.
Can I get a mortgage after I retire?
It is possible to secure a mortgage even after you retire, provided you can demonstrate to the lender that you have the means to comfortably afford your monthly repayments.
Read more: What is a retirement mortgage, and how do they work?
How many years’ mortgage can you get at 50?
The length of your mortgage term is determined by various factors, including your age at the time of application and the lender you choose. Each lender has its own policies.
For instance, some may agree to extend the mortgage term until you reach the age of 75. This means that if you apply for a mortgage at the age of 55, you could potentially qualify for a 20-year term.
Can I use equity release at age 50?
No. The minimum age for most equity release schemes is 55. Therefore, at age 50, you may not be eligible for standard equity release products.
What is a mortgage upper age limit?
A mortgage upper age limit refers to the maximum age by which the mortgage must be repaid or fully settled. The upper age limit can vary depending on the lender and the type of mortgage product.
