If you’re considering remortgaging your current home or obtaining a mortgage for a new property in your 60s or above, you may wonder how easy this is to accomplish.
It’s understandable that many individuals in the over 60 age group have concerns that lenders might reject their mortgage applications due to potential income reductions in retirement, making it challenging to meet repayments.
Fortunately, the lending landscape has evolved in recent years. Lenders are increasingly recognising the unique circumstances of individuals in their 60s and beyond, and they have become more flexible in offering mortgage options.
Even if you face a rejection for a standard mortgage, there may still be other borrowing options available to you.
Can I get a mortgage over 60?
It is definitely possible to get a mortgage over the age of 60.
Although there is no legal maximum age, many lenders have traditionally used 65.
While there may be certain unavoidable considerations, such as retirement income and repayment plans, many lenders have become more accommodating in recent years and offer mortgage options specifically designed for pensioners in their 60s and beyond.
Lenders now assess various factors when considering mortgage applications, including your financial stability, retirement income, and ability to afford repayments.
They understand that age alone should not be a barrier to obtaining a later life mortgage.
While some lenders may request details about your pension and impose restrictions on the maximum term, getting accepted for a mortgage at 60, or 65, should still be possible.
Equity Release
If you’re a homeowner looking to unlock the value of your property to support your retirement, there are equity release products specifically designed for this purpose. Home reversion and lifetime mortgages are two options to consider.
What is the maximum age limit for obtaining a mortgage?
The maximum age limit for obtaining a mortgage will vary depending on the lender and the type of mortgage product. While some lenders have specific upper age limits, others are more flexible and consider each application on a case-by-case basis.
Lenders used to set an upper age limit of around 70 to 75 years old. However, in recent years, there has been a shift toward more flexibility. Many lenders have extended their age limits, allowing borrowers to apply for mortgages at older ages, including in to their 70s.
Some may have a maximum age limit for when the mortgage term ends, typically between 70 and 85 years old. This means that the mortgage must be fully repaid or settled by the specified age.
A mortgage to help your children
The bank of Mum and Dad will often gift money to their children to assist with buying their first home.
But not everyone will have this kind of cash to give away.
In these cases it may be possible for the parents to be part of the new mortgage arrangement, using their income to boost the mortgage amount. This is likely to involve borrowing into retirement so the choice of lender is important.
In the main there are three mortgage based options:
Why is it more difficult to get a mortgage over 60?
The overriding issue is affordability.
Mortgage affordability: Sure you may be just 60 now, but if you want a 20 year mortgage then you will be 80 at the end.
Up to around age 65 is in the safe zone. Few lenders will worry about a mortgage that ends in and around age 65. But after this you will need to demonstrate how you can afford the repayments when you are retired and receiving a lower income.
Can you get a mortgage after you retire?
Yes, you may be able to get a mortgage after you retire. Your options will likely be more limited as lenders become more wary about lending to people after they retire due to their income being lower.
However, there are an increasing number of lenders who will consider lending to you after retirement. You’ll need to be able to evidence your income during retirement, whether that’s through your pension or other means. You also may need to take a shorter term mortgage, as the lender may want you to repay the loan by a specific age.
Which lenders offer these mortgages?
You’ll be pleased to know that a good number of banks and building societies are willing to offer mortgages to individuals in their 60’s. However, it’s important to note that different lenders may have varying terms regarding the repayment period, so it’s always wise to double-check.
| Lender | Max age at expiry |
|---|---|
| NatWest | 70 |
| HSBC | 75 |
| Santander | 75 |
| Halifax | 80 |
| Leeds | 85 |
| Hodge | 95 |
| Family BS | 95 |
The different types of mortgage rates
Variable Rate Mortgages
With a variable-rate mortgage, the interest rate can change at the lender’s discretion and may not exactly mirror changes in the Bank of England base rate. As the rate can go up or down, your monthly repayments will vary, so it’s crucial to factor in this potential fluctuation when planning your budget.
Tracker Mortgages
Tracker mortgages align with a bank base rate, often the Bank of England base rate. As this fluctuates, your mortgage rate and monthly repayments will adjust accordingly. Some tracker mortgages may have a minimum “floor” or “collar” rate, ensuring that the rate won’t drop below a certain level, even if the base rate does.
Fixed Rate Mortgages
These mortgages maintain a consistent interest rate for a specific period, typically two, three, five, or even ten years. With a fixed rate, your monthly repayments will remain unchanged during this period, making budgeting more manageable and protecting you from potential rate hikes.
Discount Mortgages
Discounted-rate mortgages offer a percentage reduction off your lender’s standard variable rate (SVR) for a specific period, often two or five years. For instance, if the SVR is 4% and your mortgage has a 1.5% discount, your interest rate would be 2.5%. Keep in mind that the mortgage rate will rise and fall in line with changes to the lender’s SVR.
Repayment methods
Let’s not forget the repayment methods.
There’s only three to choose from, and each one will affect the amount you pay each month.
- Repayment: The most popular and most expensive but also the ‘safest’. You will pay off your mortgage with each monthly payment, until it is all gone.
- Interest only: The cheapest option (but maybe the least safe). You only pay the interest each month and need another way to pay the mortgage back at the end.
- Part and part: A combination of the other two, so you will still have a lump sum to repay at the end.
How do part repayment and part interest only mortgages work?
We take a look at what a part and part mortgage is, how it works and whether it could be the right option for you.
Can I change my interest-only mortgage to repayment?
In this article, we’ll go over everything you need to know about switching repayment methods.
How do you repay an interest only mortgage?
We take a look at interest only mortgages; how they work, who would want one and how you pay them back.
How long does a mortgage for over 60s last?
The duration of your mortgage will depend on the lender you choose. Some lenders have specific age restrictions that determine the maximum repayment period for the loan.
As a result, you may find that certain lenders will only offer you a shorter term, such as 15 years, instead of the typical 25-year term. While a shorter term means higher monthly payments, it also means paying less interest over the course of the mortgage.
It all depends how old you are when you apply and how many years you want the mortgage to last.
However, there are lenders who do not impose age restrictions, allowing you to secure a mortgage with a 25-year term if it suits your needs.
You will find more useful information in our article: What’s the longest mortgage term you can get?
Borrowing into retirement
Applying for a mortgage in later life can be particularly challenging. In this guide we will outline the options and solutions available when you borrow into retirement.
Equity Release Guide
Over 55? Our complete guide to unlocking the cash from your home using an equity release plan.
Mortgage Broker Guide
In this guide we’ll take a look at what mortgage brokers do, how they can help you, how they get paid plus tips on how to find a good one.
How to improve your chances of getting a mortgage
If you’re looking to secure a mortgage at the age of 60 or over, there are steps you can take to get yourself mortgage ready and increase your chances of approval.
Here are some expert tips:
Increase your income
Demonstrating a regular and stable income is crucial when applying for a standard residential mortgage. Lenders want to be confident that you can comfortably afford the repayments. Consider ways to increase your income or showcase any additional sources of reliable income. Clearing existing loans or credit card balances will also free up income, improving your affordability.
Improve your credit score
A higher credit rating enhances your prospects of securing favourable mortgage terms. Ensure you are registered on the electoral roll and check your credit file for any errors or discrepancies. Taking steps to improve your credit score will put you in a stronger position.
Consider a shorter term
Opting for a shorter loan term is likely to make your application more appealing to lenders. While this will result in higher monthly repayments, it ensures that the debt is repaid more quickly, reducing the financial burden as you approach your later years and transition away from work. You still need to convince the lender that the payments are manageable.
Mortgage options if you are over 60
If you find that you’re unable to qualify for a standard mortgage or it doesn’t meet your specific needs, there are alternative products available that cater specifically to retirees and individuals over the age of 60.
Let’s take a look:
Equity release
Equity release can offer you a way to access the value tied up in your home without having to sell it. It’s important to approach these products with caution, as they can be expensive and come with certain risks.
There are two main types of equity release products to consider: lifetime mortgages and home reversion. Lifetime mortgages are more common, allowing you to borrow against the value of your home while retaining ownership.
Home reversion, on the other hand, involves selling a portion or all of your property in exchange for a lump sum or regular payments, while still having the right to live in the home.
Retirement interest only mortgages
Retirement interest only mortgages (RIOs) can be a fantastic choice for you if you’re retired and seeking to downsize or remortgage your home to pay off your original mortgage. It’s important to note that RIOs often offer more affordability compared to equity release options.
With an RIO, you’ll be required to pay the interest on the loan each month, which is a key distinction from equity release where payments are optional.
This can make it a more cost-effective option for you in the long run.
Ready to explore your options?
If you’re on the cusp of starting your mortgage journey and could use the guiding hand of a professional, don’t hesitate to reach out to a reputable mortgage broker.
They will make the process smoother and more profitable than going it alone. And remember, knowledge is power.
The more you know, the better decisions you can make. Keep reading, keep asking questions, and keep moving forward on your journey.
