While many mortgage providers impose maximum age caps, this will depend on who you approach. What’s more, there are lenders out there specialising specifically in later-life mortgage products - and we’re here to point you in the right direction.
This guide will explain the impact of age on mortgage applications, how your options vary over time, and an overview of specialist retirement mortgage products. Our guides to equity release and lifetime mortgages are also available for more in-depth information.
Why does age impact mortgage eligibility?
As you get older, you start to pose more of a risk to mainstream mortgage providers, which is why it can be trickier to secure a loan later in life. Why? This is usually down to either a decrease in income or your state of health - often both.
After you retire, you will no longer be receiving a regular salary from your job. Although you may have a pension to fall back on, it can be difficult for lenders to know exactly what you’ll be earning. Your income is also likely to decrease, which can affect your affordability.
Older people are also at greater risk of developing health problems and are less likely to survive the full term of a standard 25 - 30 year mortgage, which can further inhibit eligibility. Maximum mortgage age limits are in place to help mitigate this.
What other factors affect mortgage eligibility if you’re retired?
As with any standard mortgage, there are a number of factors that can further impact your eligibility. For retired borrowers, the most significant issues after age centre around affordability, term length, and loan to value (LTV).
How affordability changes with later life lendingAffordability is always crucial to lenders’ eligibility assessments. If you don’t have sufficient evidence to prove you will be able to make your repayments each month, chances are you won’t be approved for a mortgage.
If your mortgage term runs into your retirement years or you’re taking out a mortgage post-retirement, lenders may cap the length of the mortgage term and/or ask for you to demonstrate that your pension will be sufficient to continue the repayments.
Most lenders will assess your affordability by calculating your debt-to-income ratio (DTI), which is your monthly outgoings divided by your gross monthly income. From there, they will usually cap your loan at 3-4.5x your annual income - although depending on your circumstances they may be more lenient.
Maximum mortgage term length for retired borrowersAs established, many UK lenders have age limits for mortgage lending. One of these caps is a maximum age for taking out a new mortgage (typically between age 65 - 70), and another for paying them off (usually between ages 80 - 85).
This directly correlates with term length eligibility. For example, if you’re looking to take out a new mortgage at the age of 65 it could be tricky to find a suitable lender, and if you do they may be unwilling to lend on a 25 - 30 year term, as you will exceed most lenders’ upper age threshold part-way through.
With the help of a broker you may be able to locate a handful of niche lenders who are willing to make allowances, otherwise, you could negotiate a shorter borrowing term (and pricier monthly repayments) if you can afford it.
Property loan to value for retired borrowersLoan to value or ‘LTV’ measures the relationship between the loan amount and the market value of the property you’re buying. The higher your deposit, the lower the LTV, and the greater choice in lenders and more competitive interest rates you’ll be offered - as with any standard mortgage application.
For repayment mortgages, most lenders are happy to approve with 80%+ LTV, which would require a 20% deposit. Others are happy to accept 85% LTV, and a select few may accept as high as 95% LTV - all subject to you meeting the remaining eligibility criteria.
For standard interest-only plans, 85% LTV tends to be the maximum available, although for older applicants this tends to decrease to around the 75% mark. Since there are fewer lenders offering later life mortgages, interest rates tend to be higher than that with standard mortgages, so if you can afford a higher deposit you will not only own more equity from the off, you’ll likely pay considerably less interest in the long run.
Other factors impacting later life lending eligibilityThere are a few additional factors that can create more obstacles for later life borrowing, such as the type of property you want to buy and issues surrounding your credit history. As with any mortgage application, it tends to be more difficult to secure a mortgage on a ‘non-standard’ construction type due to the risk associated with such properties.
If you’re unsure as to what constitutes a non-standard property, why not get in touch for advice? Likewise, you pose a higher risk if you have a history of adverse (especially recently) or a poor credit score, which can inhibit your chances of approval or limit your options - although we have access to some specialist lenders who may be willing to consider your application.
What is the maximum age for mainstream mortgages?There’s no getting around the fact that age can count against you when it comes to getting a mortgage. Regardless of your circumstances, your options are more limited as time goes on. Here’s a run-through of your options once you hit the big 5-0 and successive milestones:
Mortgages for over 50sWhen you reach your 50s you’re still likely to have plenty of options available to you. If you’re considering taking out a mortgage, standard 25-year terms and competitive interest rates should be readily available to you from numerous lenders - although you may need to provide evidence of predicted retirement income for later down the line.
This could be the last time you’ll enjoy this much mortgage flexibility, so you might as well make the most of it. If you’re currently paying off a mortgage, you might be thinking about settling up early. Thinking about releasing some equity to free up some cash? Now’s your chance. Of course, none of these options are risk-free. Before making any decisions, why not get in touch to discuss your options with our friendly team?
Mortgages for over 60sWhen you’re in your sixties, options are slightly more limited but you still have some of the freedoms you benefit from in your 50s. As you’ll be approaching retirement you will almost certainly be asked to provide evidence that the income from your pension and any other investments will be adequate to cover your repayments if you want to take out a new mortgage.
Due to age caps, it’s unlikely that you’ll be able to take out a home loan on a standard term length - although there may be some exceptions.
Mortgages for over 70sIt can be difficult, but not impossible, to get a mortgage in your 70s. You may only be eligible for shorter term lengths of up to 10-15 years, although you could consider going down the guarantor mortgage route if you have a willing family member. That being said, some lenders are more flexible than others, and based on your other circumstances some niche lenders and building societies may have a wider range of options available.
Mortgages for over 80sWhile options are far more limited for the over 80s, there may be a handful of niche providers who will consider lending to you - although you should expect plenty of questions and close scrutiny of your financial accounts and other personal circumstances. Due to your age, you’re likely to be limited with the term length, but again it’s worth discussing your options with a broker.
Summary: maximum age limits for mortgages
Likelihood of acceptance
Plenty of lenders are happy to offer standard lending terms and competitive rates for borrowers up to age 60.
Many lenders impose an age cap at 65 - 70, but will allow the mortgage to continue into retirement if affordability is sufficient.
Lender choices become more limited, but some will cap at age 75 and a handful up to 80 if eligibility criteria are met. Term lengths may be restricted.
A handful of niche lenders have no upper age limit, but you are likely to be offered reduced term lengths. Rates may not be as competitive, and criteria may be strict.
No age limit
Alternative later life mortgage optionsProvided you tick the boxes on the eligibility checklist, borrowers 50+ still have plenty of flexibility in the type of mortgage they have access to - from fixed-rate, variable or offset mortgages. There are also a number of specialist mortgage products for older borrowers that can make it far easier to get a mortgage:
This is a form of equity release you’re eligible for once you reach age 80. This type of mortgage is secured on your property, providing it’s your main place of residence and allows you to retain ownership. The loan amount and any accrued interest is repaid when you pass away or move into long-term care, and you can choose to set aside some of the value of your property as an inheritance for your family.
This is another form of equity release, in which you sell part or all your home to a home reversion provider in return for regular payments or a lump sum. You can continue living in the property rent-free until you die, providing you insure and maintain it.
Retirement interest-only mortgage
Similar to standard interest-only mortgages, but in this case the loan is usually only repaid when you sell the property, pass away, or move into long-term care. RIO mortgages usually have a minimum age requirement of 50, though some agreements require their borrowers to be 55 or even 60.
Older People’s Shared Ownership
If you’re 55 or over, you may benefit from this shared ownership scheme aimed at older people. It works in much the same way as traditional Shared Ownership, but you can only purchase a maximum of 75% of your home, and you pay rent on the remaining share.
Speak to an expert to discuss your retirement mortgage options. If you’re approaching retirement or already retired, we hope this guide has reassured you that there are certainly options available if you’re looking to add to your portfolio or even take your first step onto the property ladder.
Our team of experts has access to a wide range of highstreet banks and building societies, as well as more niche providers specialising in later life lending, so we’re confident that we’ll be able to secure you a competitive deal that works for you. Give us a call on 02380 980304 or submit an online enquiry and a member of the team will be in touch.