In years gone by, a person would typically pay off a mortgage over a 25-year span, paying off the debt before retirement. However, people are now working and living for longer, with some not buying a property until they are in their 30s, or older. Mortgage options for someone who is approaching retirement used to be few and far between, but now lenders are often willing to lend to older borrowers.
During the first six months of 2016, a number of lenders announced that they would be willing to provide a mortgage for older borrowers, with the Nationwide increasing its age limit to 85 years old.
All lenders will still use affordability checks, and this may include providing evidence of income during retirement, to ensure that you can afford repayments. A number of smaller building societies may be more likely to approve a mortgage application from an older borrower, as they rely less on a computer-based decision. However, building societies often prefer to lend to those living in the locality of the lender.
Another option for many older borrowers with a lot of equity but smaller income, is equity release. There are many reasons for equity release, and there is now greater competition among lenders who provide this option. Nationwide is the latest to announce that they are considering offering equity release, with the retail director for the group, Chris Rhodes, saying that the product would be likely to feature a reasonable fixed interest rate.
For anyone considering equity release, it is important to speak to a CeMAP qualified mortgage adviser.
