Are there any mortgages for over 60s?
Mortgages for older borrowers over 60
Unfortunately answering this question isn’t as easy as it should be as although many mortgage lenders state a maximum age to apply for a specific mortgage product you will actually find that your income is also likely to play a significant part of whether you are likely to get accepted for your mortgage application. With the mandatory retirement age being abolished and the state pension age rising to 68 many people are now working longer and so if you are still working when you apply for your mortgage you are likely to be more successful than if you are relying on an income from a pension and other savings schemes.
Moving from an interest only to a repayment mortgage
If you are over 60 and currently have an interest only mortgage and are worried about finding the lump sum at the end of it you may be able to move onto a shorter term, 15 to 20 years, repayment mortgage in order to guarantee having it paid off at the end of the term. If you have planned ahead and have built up a lump sum in preparation for paying off your mortgage at the end of the term you could use this as a deposit. If it is a reasonably large proportion of the value of your property, particularly if it is over 40% of the value of your home, you will find it much easier to find a mortgage lender that will provide you with a mortgage.
Other mortgage types for the over 60s
Do you need an equity release mortgage?
If you currently own your home outright and you wish to release some equity from it you may be considering taking out a mortgage on it. Due to the age restrictions on new lending for residential mortgages you are likely to find that you will not be able to take out a standard residential mortgage, especially with the stricter requirements for proving the affordability of the repayments. Therefore you are likely to find that your options are restricted to equity release mortgages. There are a number of equity release options, none of which give you a great option as all of the deals available ensure that you end up paying the lender far more than they release to you. This is either through you taking out a lump sum and then paying interest on this until your death, or your home is sold, or your lender effectively buys a percentage of your property, usually around 70%, providing you with between 20% and 25% of the equity in return. Again, when you die the sale of the property provides the money to pay the lender their 70%, with 30% being retained. The third main option is a home income plan that provides you with an income from the sale of a share of your home.
Mortgage calculator – what are the repayments?
Use this mortgage calculator to find out an idea of the monthly repayments and discover how much you could potentially borrow.
Get advice from a no-fees mortgage broker
With all of these mortgages having complex requirements and conditions it is always advisable to speak to a specialist mortgage broker so that you understand exactly what you are taking on. The have the knowledge of the lenders and market place to give you advice and help on what options are available to you.
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.
The lowdown on mortgages for the over 70s
What mortgage options do the over 70’s have?
More and more people are getting to their old age and are finding it difficult to live on the state pension. With the size of the pension set to decrease in real terms, chances are more and more people are going to have to consider releasing equity from the homes that they own outright in order to provide the money to make their lives more comfortable. However, if you find yourself in this situation there are some facts that you need to be aware of before you commit to taking up one of the equity release mortgages.
The roll up lifetime mortgage
These mortgages essentially pay you a lump sum of somewhere between 20% and 25% as a loan that is then paid back when you die or when you go into long term care and your home is sold. This initially sounds like a very attractive option as you don’t have to make any monthly payments. However you do have to be aware that although you initially get the loan interest free, you then start paying interest on it, which gets added onto the loan amount that gets repaid later on. The interest rate starts at 1.75% in the first year, but this then increase each year that you have the loan. It doesn’t take much calculating to know that your loan amount is going to grow fairly quickly. Depending on how long it is between you taking the loan out and your home being sold to pay it off, you could find that there is very little equity left once the loan has been repaid. The only guarantee is that the loan will never be more than the equity in your home.
The home reversion plan
Over 70’s could consider a home reversion scheme??
With the Home Reversion Plan you sell a share of your property to a lender in return for a cash lump sum. The share of your property that you sell will generally be around 25%, but you will be giving up up to 70% of your home. You can live in your home rent free, but when your home is sold the lending company will get 70% of the sale value. Unlike the roll up mortgage, this percentage share will not change so you will know exactly what you will have after the sale to leave to your family after you die. However the exact monetary amount will depend upon the final value of the property.
Don’t take risks, get advice
The two options mentioned above are not the only ones available and before you commit to taking out any loan you should be fully aware of the commitment you are making, especially as there can be severe financial penalties should you choose to repay your loan. Therefore you should make sure that you consult the experts in order to ensure you have all of the information you need to make your final decision. A specialist mortgage broker can identify all of the relevant products for you and advise you throughout the process.