Are there any mortgages for over 65s?
What are your mortgage options if 65 or over?
The effects of the credit crunch meant that form 2008 lenders severely restricted the amount of lending that they would give to older borrowers. There are a number of different criteria that came in over a couple of years, with the most significant one being that most lenders will require you to have your mortgage paid off by the time you retire. If you are over 65 and are retired this means that you will have a more limited number of options should you wish to take out a standard mortgage. The only way you would be able to do this would be if you still had a substantial income from pensions and other investment schemes in addition to a large deposit.
Age limits explained
The new lending criteria that lenders have adopted means than it is now incredibly difficult for people approaching retirement to take out a new mortgage. This is because that most require you to have your mortgage paid off by the time you are somewhere between 70 and 80. If you are already 65 this leaves you with a maximum repayment term of 10 years, and so you could find your repayments being much higher than you have been accustomed to. This is particularly true if you are attempting to change from an interest only mortgage to a repayment mortgage if it is looking like your investments to pay off your interest only mortgage is not going to cover the entire amount.
Other mortgages available for over 65s
Switching from an investment mortgage to a repayment mortgage is not the only type of mortgage option you may be considering if you are over 65. Something else you may be considering is using the equity in your home to provide yourself with some additional cash. Before 2008 you would have been able to do this by taking out a standard residential mortgage to give yourself a cash lump sum, although you would still have had to make the monthly repayments. Now it is almost impossible to do this, so a number of equity release mortgages have been developed so that you can release equity from your home. However you need to make sure you are aware of all of the facts before you do this.
What is an Equity Release Mortgage?
If you're 65 or older you could consider a lifetime mortgage
The way an equity release lifetime mortgage works is that you take out a lump sum, usually between 20% and 25%, often dependent on your age, the older you are, the larger the amount you are able to take as a lump sum. You then don’t make any repayments on this amount, but the loan amount does attract interest, which increases every year, and so your loan amount can increase rapidly over the years. If you live for a long time after taking the loan out you could find that the loan has grown to take up much of the equity of your property, which means you could have very little, or nothing, to pass down to your children.
Take advantage of a mortgage broker
A good broker will be able to explain what options you have and will discuss which lenders are available to you. They will offer advice and assist you in completing your mortgage application with the lender.