Over 50s Mortgage
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Over 50s Mortgage
Can I get a mortgage if I’m over 50?
Yes, certainly. Don’t just assume that you can’t. High street lenders tend to cut off mortgage terms to age 70, or at a push age 75. So there’s still a potential to take out a 15-year term.
However, if that’s going to make your monthly payments a bit too high, other lenders specialise in much longer terms. Just be prepared to discuss your future pension income with them.
Lenders will want to understand what job role you do now, when you are looking to retire and what income you’re going to earn when you are retired.
What is the age limit for a mortgage?
Believe it or not, some lenders will go to age 99 or even have no end date at all. It really comes down to affordability, your age at the point of application and what your situation looks like.
If you’ve got a good strong pension income, that works in your favour – because when a mortgage is stretched for much longer, the monthly repayments will be lower. Your pension will make it more manageable to pay the mortgage and your household bills. Lenders need to ensure you can run your own home on your retirement income.
Your pension will remain the same, or go up in line with inflation every year. Around April you will potentially get letters from your private pension or state pension to confirm that your income has gone up a little bit. That allows you to sustain your cost of living and pay the mortgage. Even if you’re 80, 90 or 100, that pension should remain with you.
If you take a repayment mortgage, where you pay capital and interest, some lenders are happy to offer these up to age 99. Their view is that your mortgage will come down over the years because you’re chipping away at the balance.
If you take out an interest only mortgage, monthly repayments usually are lower. But at some point they would expect you to pay that balance off. That’s usually through deciding to downsize because It’s not a manageable property anymore. When you come to sell, you’ve got enough equity to pay back your mortgage and be a cash buyer for a smaller house.
How many years’ mortgage can I get at age 50 and over?
If you go to a mainstream bank, you’re looking at potentially 20 years plus. With specialist lenders, you can have 30 or 40 year mortgages – it just comes down to affordability and what your budget looks like.
How much can you borrow when you’re over 50?
Regardless of your age, it’s looking at your basic salary and multiplying that, usually by four and a half. That’s the same if you’re under 50 or over, because it’s based on your working income. If it’s your pension income, it would be typically around three times that amount.
What types of mortgages are available for over 50s?
There are specific ‘50 plus mortgages’ which operate in the same way as a standard mortgage – you borrow an amount and pay it back via monthly repayments. There’s a set term, which can go up to age 80 or even 90 depending on whether you choose a repayment mortgage or interest only.
The next band is retirement interest only mortgages. Even if you are still working at age 50, that income would be ignored – it’s purely based on what your pension income will look like in the future.
You can also look at equity release, which is where you release money from your property. The borrowing amount is based on your age and the value of the property, but you’re not making any monthly repayments towards it. Equity release rates are fixed for the lifetime.
50 plus and retirement interest only mortgages can be fixed, discounted or variable – it depends what the lender offers. If they are fixed or variable, whenever those terms are finished on your particular deal, you can remortgage to the same mortgage type. You can either go with the same lender or we can help shop around for 50 plus mortgages to find other rates out there for you.
What can be included as income for an over 50s mortgage application? What do lenders assess for an over 50s mortgage?
Mainly it’s your earned income. If you’re working, what is your basic salary? Do you receive bonuses? If you receive bonuses, what have they looked like over the last two years? Do you get overtime? That will be compared to your P60, which tells you your annual total earned income in that year. Lenders look at all those comparables.
Because it’s variable income, only some of that is used, but your base salary will be used at 100%. If you’re self-employed, lenders look at what business you own and the type of ownership. For example, are you a sole trader or a director of a limited company? How many other directors are there?
It’s a little more complex, as we look at accounts, business structure, how much you’re earning from that and how you’re taking your income.
We will have a conversation about how long you want to take the mortgage for and what your monthly repayments would look like. If we’re going past age 75, we need to consider your pension income. You might have been working since you were 18 years old and been paying into a pension scheme since then.
You might not even know – perhaps the employer at the time automatically took deductions out of your wage. You may have accrued lots of different pensions over your working life.
It’s good to get organised and contact previous employers to find out what your pensions look like for when you retire.
You can also go onto the government site and type in your date of birth and your national insurance number. It works out your state retirement age and your likely pension income. So there’s a bit more to do than for a standard mortgage.
If you’re going to borrow into retirement, you need those pension details ready. If there’s any other future income such as investments that you’ve been putting away, gather that information, because that is what lenders will assess your overall income on.
You may have Buy to Let property in the background as your future pension income. We would need to understand how many properties you’ve got and your plan. Are you going to keep those when you retire? Are there any mortgages on those? A lender will need to understand how much profit you are making out of those properties, plus any other pension income.
Lots of things can be considered, let’s put it that way.
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Can I get a mortgage if I’m over 50 and self-employed?
Yes. It helps if you have a good accountant who can get you all your company accounts or self assessments, depending on the structure of your business. If you’re a sole trader and you do your own accounts, that’s absolutely fine.
Typically, a lender will ask for at least two years’ worth of accounts, depending on how long you’ve been trading for. That gives a good picture of your income and whether it has increased or dropped from year to year.
Then it’s the same thing: what is your retirement income looking like? Are you going to sell the business? Are you going to continue in the business or sell some shares? Sometimes people are not necessarily prepared for all these questions, but if you want to work into your 80s or 90s, you need an idea of what your business is going to look like, and your income when you do finally quit.
What if I’m over 50 and have bad credit? What are my options?
If you are over 50 and we go with a standard high street lender looking purely at your earned income, you might be okay. You might get away with bad credit.
It depends what that bad credit is, as well. It could be County Court Judgements, or defaults, but perhaps you think you have bad credit because you accidentally missed a payment on your insurance. That’s less of an issue. It will show up on your credit file, which is assessed when you apply to a lender and the records are held for six years. But it depends on what lenders perceive as bad.
That’s a conversation to have with an advisor. Do a credit check first on yourself and present that report to an advisor. We can then speak to lenders and ask if they would accept the situation.
It depends how long ago it happened. If it was four years ago, it may be waived. If it only happened in the last six months, it’s not a good time to be applying for a mortgage.
You can certainly apply when you’re over 50, but bad credit would need to have a full conversation. A high street lender may waive an issue, but a lot of later life lenders don’t want any bad credit at all. So you have to be careful.
Can I get a Buy to Let mortgage if I’m over 50?
Absolutely, yes. Buy to Let isn’t as heavily regulated as mortgages for personal property. There are rules around Buy to Let applications and how they are assessed, but they’re not as stringent as if you were buying your own residential property. Because your residential property is where you live, you want to keep a roof over your head – so it’s assessed more robustly.
If you’re 50 and over, that’s usually not a problem. Some specific lenders who only do Buy to Let don’t even have an age cap. It’s seen as an investment property for however long you live.
As long as the rental income is over a certain percentage of the mortgage payments,
they are more than happy for you to apply. You do need to have a minimum of 25% deposit ready.
Can I port my mortgage to move home if I’m over 50?
Yes. Again, we need to consider the rules of the lender you’re with. Most lenders will allow you to port your mortgage, which is taking your existing mortgage and moving it across to the next house you’re looking to move to.
The main reason to do that is because you want to protect the rate you’re on. It might be a particularly fantastic rate and, also, you are fixed in, so you don’t want to pay any penalties to come out of it.
Lenders generally understand that you want to avoid paying a penalty, but if they cap mortgages at a certain age, you will be limited to how long you can take that mortgage for.
The existing mortgage will remain as it is. If you need to borrow any extra money, that’s a top up to your ported mortgage. You may be limited in how much extra you can borrow or how long that term can be, depending on the lender’s rules.
Are there over 50s friendly mortgage lenders?
Absolutely, and they’re coming through thick and fast. The industry recognises that we are living longer, working longer and our lifestyles have changed.
Historically, you could only choose between an equity release mortgage or a standard mortgage. There was no inbetween. But the Financial Conduct Authority put pressure on lenders to provide for people with a decent pension, with no major liabilities such as big credit cards and loans.
Actually, this market can have more disposable income. So rather than going straight to equity release, where the equity from their home is chewed up, lenders now allow clients to explore what else is out there. It’s quite an exciting time actually because it’s still quite new.
I look at things holistically. I look at whether we can get you a high street lender, or whether to look at 50 plus mortgages with a specialist lender, and we’ll look at equity release as a last resort.
Is the mortgage application process the same for over 50s?
Yes, it’s exactly the same. Whatever income is being declared for affordability is what we would need to provide to the lenders. As well as your standard bank statements to show your activity, credit reports and identification, we need to see your pay slips – or accounts if you’re self-employed.
If we’re using your future income, we need to see letters or statements from your pension providers as well.
How do I increase my chances of getting a mortgage if I’m over 50?
Preparation is key, so get organised, list out all the pension pots – even ones you might have forgotten about. See how much equity you’ve got in your home.
It depends what you’re looking to do. Are you looking to remortgage for a certain purpose? Are you looking to downsize? Even downsizing can still involve a mortgage nowadays, because some homes are not cheap to buy.
Get advice early on, find out what you need to do so you can start preparing. I typically keep in contact with my clients if it’s not something they’re quite ready to do. We touch base every so often until they are ready to go ahead and purchase a property.
Keep track of your credit report. Keep on top of paying your bills – because you don’t want any blips, especially when it comes to the point of applying for your mortgage.
What can I do if I’m over 50 and my mortgage application is rejected?
It could be that your situation doesn’t quite fit the criteria for the bank. It would depend on the circumstances. If you’ve tried to do it yourself, you won’t know all the details on what the lender will and will not allow.
Speak to an advisor, if you haven’t already. We can speak directly to the lender and find out why it was rejected. We can then move on to other lenders.
It could be that something’s come upon your credit file that wasn’t disclosed. You may not have been aware of it. Perhaps the income didn’t quite meet affordability, but usually thorough checks are made before that.
It could be that the house that you’re looking to buy doesn’t meet the lender’s criteria. If it’s quite a quirky property it may not meet their property checks.
Whatever the reason, it’s crucial to know, to avoid rejection on the next application. You can make another application, so don’t be disheartened.
What else do we need to know about over 50s mortgages?
What I would highlight is that it’s not specifically an age thing. It is more to do with vulnerability. For example, you may have unfortunately gone through a divorce, or you’ve got married – there can be certain circumstances around why you’re buying a new house.
Whatever that circumstance looks like, just be quite open and honest with your advisor. We do check for signs of vulnerability. Do you just need that little bit of guidance from a friend or family member? They are always welcome to join in our meetings. Actually, I prefer it, because I feel reassured that you’re taking in the advice.
It’s quite a big thing to do, especially if you bought a house in your mid twenties and you haven’t done it since then. It can be quite a daunting process. So it’s just understanding what the situation has been – and do feel free to bring somebody else along with you.
Your home may be repossessed if you do not keep up repayments on your mortgage. You may have to pay an early repayment charge to your existing lender if you remortgage.
Not all buy to let mortgages are regulated by the Financial Conduct Authority.
A lifetime mortgage is a long-term commitment which could accumulate interest and is secured against your home. Equity release is not right for everyone and may reduce the value of your estate.