Mortgages for over 50s
Mortgages for over 50s are widely available however the older you get, the more difficult it becomes. Lenders set their own age limits which could rule out some older borrowers however there are companies that specialise in mortgages for over 50s, over 60s and even over 70 year olds.
The following information explains the type of mortgages available, specialist mortgages for over 50s and 55 year olds and how to improve your chances of being accepted.
Mortgages for older borrowers
Lenders have their own rules on mortgages for older borrowers. Age limits are usually based on either the maximum age on application, ranging from 65 to 80, or the maximum age when the mortgage terms ends. This is typically between 70 to 85 but again depends on the mortgage lender.
Mortgages for over 50 year olds
Mortgages for over 50 year olds are flexible, especially as we are living longer lives and in many cases, working past retirement. Over 50s can still expect to get mortgages over 25 years however it’s important to remember, the longer the term, the more you will pay.
Therefore, if you’re over 50 and looking for a mortgage, consider your affordability carefully. If you can choose a shorter term or perhaps make overpayments, it will cost you less in the long run.
Mortgages for over 60s
Mortgages for over 60s are quite flexible however the term may be shorter, for example 10 or 15 years. This of course means that the monthly mortgage payments will be higher. Being over 60 you will need to demonstrate affordability as your mortgage term could run past retirement age.
Therefore, information on pensions, annuities and investments should be readily available.
Mortgages for over 70s
Mortgages for over 70s are more limited as this is the maximum age for many lenders. However, there are specialist lenders dedicated to offering mortgages to older borrowers, including over 70s. Its is also worth speaking to smaller lenders as they tend to be more flexible.
The term of the mortgage will certainly be much shorter and again you will need to prove you can make the repayments.
What is the difference between an interest only mortgage and a repayment mortgage?
With interest only mortgages you only make monthly repayments against the interest whereas with repayment mortgages, you also repay some of the loan. Therefore, with a repayment mortgage you’ll own your property once the mortgage ends. However, with an interest only mortgage, you’ll still need to repay the original loan.
This means that with repayment mortgages, your monthly payments are higher but the overall cost will be cheaper as the size of the debt is reducing all the time. Whereas with an interest only mortgage, you will benefit from lower monthly payments however you will need to have some form of repayment vehicle in place to repay the original loan once your mortgage term ends.
What types of mortgage are there?
There are several types of mortgage however all tend to fall into either the fixed rate or the variable rate category. This includes:
- Fixed rate mortgage
- Standard variable rate mortgage
- Tracker mortgage
- Discount mortgage
- Capped mortgage
- Offset mortgage
Here’s how each one works.
Fixed rate mortgages
With a fixed rate mortgage your interest rate remains the same for the length of the deal, regardless of whether interest rates change. Therefore, you’ll know exactly how much you are paying during the fixed rate term and you won’t have to worry about rising interest rates.
However, if interest rates drop during your fixed period, you will continue paying your fixed rate which could be higher. Also because of the certainty, interest rates tend to be higher on this type of mortgage.
Standard variable rate mortgage
With a variable rate mortgage, your interest rate can go up and down. Each lender has their own standard variable rate which typically follows the Bank of England’s base rate. The variable rate is also usually the rate you are switched to once your fixed, tracker or discount mortgage ends.
A tracker mortgage tracks another rate which is usually a percentage above the Bank of England base rate. This means that just like a variable rate mortgage, the interest rate you are charged during the length of the tracker deal can go up and down.
To prevent the interest rate from rising too dramatically, some tracker mortgages are capped. This means there will be a limit to how high your interest rate can rise.
Discounted mortgages are usually set a percentage below the lender’s standard variable rate for a set period. It is therefore a type of variable rate mortgage which means the amount you pay can go up and down.
Capped mortgages are variable rate mortgages with a difference. They guarantee your interest rate will not rise above a certain percent. Interest rates on capped mortgages tend to be higher than tracker or discount mortgages however you have the reassurance that your monthly payments won’t exceed a certain level.
With an offset mortgage your savings are used to reduce the amount of interest you are charged on your mortgage. For example, if your mortgage is £100,000 and you have £15,000 in savings, offsetting your savings against your mortgage would mean you only pay interest on £85,000.
Using your savings this way means you can either lower your monthly payments or reduce your mortgage term. You just need to have your savings and mortgage with the same bank or building society.
Later life mortgages
In addition to variable and fixed rate mortgages, some lenders also offer a range of later life mortgages. Designed for homeowners aged 55 and over, these later life mortgages give older borrowers the chance to unlock equity tied up in their home;
Retirement interest only mortgages
With this type of later life mortgage, you only make monthly repayments against the interest accrued on the loan. The capital is then paid from the sale of your property, once you have died or moved into long term care.
As you are only repaying the interest monthly, the repayments on retirement interest only mortgages are lower. Therefore, you will still need to prove your affordability, but it won’t be as high as with a standard mortgage.
Also known as lifetime mortgages, this type of later life mortgage lets you unlock the equity tied up in your home without the worry of monthly repayments. The loan plus the interest accrued are only repaid once you have died or moved into care and your property is sold.
As the interest is compounded, rates on equity release loans are higher and will affect any inheritance you leave to family. However, because there are no monthly repayments, you don’t have to pass affordability checks to apply.
How can I increase my chances of getting a mortgage?
If you’re over 50 and looking for a mortgage, there are several things you can do to increase your chances of being accepted.
- Have a plan in place for how you will repay the loan along with supporting paperwork.
- Review your credit score. Where necessary look for ways to improve it by paying bills on time and challenging any inaccuracies.
- Save as large a deposit as possible. The lower the lenders risk, the more likely they are to say yes.
- Get the advice of a qualified mortgage adviser
- Look at lenders who specialise in mortgages for older borrowers
Which lenders offer mortgages for over 50s?
Many banks and building societies such as Halifax, Santander and Nationwide offer mortgages for over 50s. However, your options reduce the older you get, which is where using the free services of mortgage brokers like London & Country can help.
Alternatively, if you’re interested in understanding more about the later life mortgage options, leading experts Age Partnership can talk you through the options and compare the market free of charge.
What happens if I can’t get a mortgage?
If you can’t get a mortgage with the first lender you approach, it’s worth speaking with other mortgage providers as lending criteria varies from company to company. If you still can’t get a mortgage, you may want to consider one of the later life options.
Frequently asked questions about mortgages for over 50s
What is the age limit for getting a mortgage?
Age limits for getting a mortgage vary by lender. This will either be based on your age when applying for the mortgage, which can range from 65 to 80, or your age when the mortgage term ends, typically 70 to 85.
How can I get a mortgage over 50?
To get a mortgage over 50 you need to consider affordability and the type of mortgage you require. It then helps to talk to mortgage experts like London & Country who can help you compare the market for free.
Is 55 too old to get a mortgage?
55 is not too old to get a mortgage however it will depend on the lender. Although there is no maximum age for getting a mortgage, lenders set their own age limits. It is therefore worth shopping around or using the free services of a mortgage broker like London & Country.
How long can I get a mortgage for at 50?
The length of mortgage available to over 50s will depend on the lender as they set their own age limits. They will also take into account when you are aiming to retire and how you plan to make the mortgage repayments.