The Maximum Working Age (MWA) is the age up to which lenders consider an applicant’s earned income when assessing mortgage affordability.
Most UK lenders set an MWA ranging from 65 to 70 years, inline with the State Pension age range. However, some, like Halifax, have recently increased the MWA from 70 to 75. This change reflects a growing trend to support customers willing to continue working beyond traditional retirement ages.
MWA affects both employed and self-employed customers. If you’re seeking a mortgage term that extends beyond the age of 70, lenders like Halifax will require you to complete a specific form, confirming your intention to continue working until the indicated age.
The lender can then use your earned income when calculating how much you can borrow.
The Maximum Working Age applies differently to various mortgage types. For capital and interest repayment mortgages, the new MWA of 75 applies. However, if any element of the mortgage is on interest-only, the MWA remains at 70.
Lenders assess affordability based on MWA. If lending extends beyond the lower of your anticipated retirement age or an MWA of 75, affordability will be based on future retirement income. It’s a crucial factor in determining the mortgage amount you qualify for.
All lenders are having to review their lending criteria as the UK population ages, works longer and lives longer. This means many more homeowners need to borrow into their retirement.
