Aged 50 and over and struggling to get your desired mortgage loan?
Age is just a number, or so the saying goes, but it does matter if you’re applying for a mortgage. If you’re aged 50 and over and want a mortgage or remortgage into retirement, you may struggle to get the loan you desire.
Getting a mortgage at any age may not be possible because lenders often impose upper- age limits on each mortgage. It’s not unusual to see an upper age limit for new mortgages of 65 to 70 or age limits for repaying a mortgage between the ages of 70 and 85.
CHALLENGES WITH AGE LIMITS
Banks and building societies are likely reluctant to approve loans extending beyond retirement age. This is primarily because that’s when your income is likely to drop.
Even though many borrowers will continue to earn beyond retirement age
and be able to support a mortgage, either through working longer
or using income from savings and investments, challenges remain.
If you’re aged 50 and planning to retire at 60, you may struggle to get a mortgage.
And if you do secure a mortgage, you may have to repay it before your 70th birthday.
This means a term of 20 years instead of the typical 25. A shorter term results in more
expensive monthly repayments at a time when your income may fall as you
enter retirement.
OPTIONS FOR OLDER BORROWERS
Generally speaking, smaller banks and building societies are more
likely to be amenable to older borrowers as they will often lend beyond the age of 75 on a case-by- case basis.
Another option is a retirement interest-only mortgage. This type of home loan is aimed at older borrowers who may need help to get a mainstream
mortgage due to age limits.
One of the best ways to increase your chances of getting a mortgage in your 50s is
to have a clear plan for repaying the loan. Knowing your budget and monthly
outgoings will help you understand how much you can afford to borrow.
PREPARING FOR YOUR MORTGAGE APPLICATION
You should also check your credit report and look at improving your credit score before
a mortgage application, as this will also increase your chances of approval.
For mortgages for over-50s, you will need to prove you have adequate
income to cover the repayments post-retirement, just as you would if you were working full-time.
Expect to show your bank statements and a statement confirming your pension
payments or evidence that you are receiving a pension. Your lender will also examine your regular expenditure to assess an affordable borrowing amount.
PROVING FUTURE INCOME
As you near retirement, you will need to provide a statement forecasting your income. When you are more than 10 years away from retirement, lenders may only want to see whether you contribute to a pension scheme.
If you’ve had different jobs over the years, check your records to ensure you have details of all the various pension schemes you may have contributed to.
Proper documentation and proof of contributions can significantly impact your
application’s success.
>> ARE YOU LOOKING TO OBTAIN A MORTGAGE LATER IN LIFE? <<
While obtaining a mortgage after age 50 presents unique challenges, it is not impossible. Byunderstanding the specific requirements and preparing thoroughly, you can
improve your chances of securing the loan you need.
Cedar Crest Ltd – telephone UK T: +44 (0) 203 883 1017,
HK T: +852 6645 4462
SINGAPORE: +65 8363 9221
– email info@cedar-crest.co.uk
Your home may be repossessed if you do not keep up with repayments.
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