Age should not be an issue when getting a mortgage.

Just because you’re over 65, it doesn’t mean you can’t have a mortgage!  But sometimes it can be harder to get a mortgage that is right and affordable, due to age restrictive terms, once you reach a certain milestone with the high street lenders.

Often, retired people have managed their finances successfully over the years and enter retirement mortgage free.  At the same time, many, whilst having no mortgage, also suffer from reduced income.  Others may wish to continue their mortgage past normal lender retirement age, whilst they may still be working.  There are schemes where equity can be turned into a mortgage (not necessarily equity release) and where off-spring may be able to assist with the repayments in order to secure and protect their inheritance whilst also ensuring a comfortable retirement for their parents.  This is not right for everyone, but it is certainly worth talking to a qualified adviser to review all possibilities.

According to some industry reports, there are an estimated 100,000 people due to come to maturity on their interest only mortgage in 2020, aged over 60.  Many will probably have no way of repaying their interest only mortgage.  Some will have endowments that didn’t meet expectations, or maybe the house has not increased in price as much as hoped.  Stricter mortgage rules and lending criteria has made it harder for those over 65 wanting to re-mortgage.  However, despite the high street being almost a closed entity, there are plenty of other options (not that your current lender is likely to advise them - they just want their money back!).

The lender has the right to request repayment of their loan at end of the mortgage term.  If the customer has no way of repaying this and has just continued to pay the interest over the last twenty-five years or so, they face the possibility of having their home repossessed or being forced to move out.  On the high street, the end of the loan term will normally hit those aged between 65 to 75.  This is not new news but does highlight that many people are still burying their head in the sand and hoping this will go away or the lender may be lenient.

There are a number of lenders that recognise that 'normal retirement' age is no longer set in stone and people continue to work long into later life. These are not high street names and as such, are not known to everyone.  But with some having no maximum age at all, at least they will consider helping out and could keep you in your family home for years to come.

Equity Release is not right for everyone. What are the other options?

It seems to be that you can’t turn on the TV without seeing an advert for Equity Release.  

This is one area of the market that continues to gain momentum.  It gets a huge amount of airtime and column inches, yet its estimated to be just a £4bn part of a £260bn+ mortgage market and not necessarily right for everyone. 

Equity Release, put simply, is a scheme through which the asset rich can release funds from the equity in their property. This scheme normally applies to applicants approaching the twilight of their life although it is not uncommon for the newly retired to participate. Equity Release is highly regulated to ensure no high pressure selling and we always encourage offspring involvement.  After all, the equity is likely to form a major part of their inheritance and they should always have the opportunity of finding alternative methods of funding their parent’s lifestyle first.  Some providers also allow the interest to roll up, so there are no monthly payments, and some allow the capital raised to be used as future income.

What you don’t see in the adverts and on TV for Equity Release, are the alternatives.  When coming to the end of the mortgage term with your lender, it’s rare to be offered any additional products to stay with them as you are ending the mortgage contract (normally 25 years or more).  They also fail to advise you to seek further advice about re-mortgaging to another provider.  Despite ages possibly having achieved ‘later life’ status, there are options available and although this might cease on the high street, as their maximum ages tend to be between 70 and 75, there are a huge number of lenders who will still lend. 

Why should a customer not have a mortgage due to being in advance of normal retirement age?  We know people are working well in to their 70’s now and some are deferring pensions until needed.  So, for the right customer, with the right income and right loan to value of the property, a normal mortgage is still achievable.  These lenders will be building societies, or similar, dotted around the country but having been established for decades, even centuries!  They think outside the box, manually assess and will take a reasoned decision, rather than a computer based ‘tick box’ response.  They will also consider interest only options, assuming there is a suitable repayment strategy in place.

Terms and conditions always apply, and specialist advice should be sought as this can be a very complex matter and can affect future equity and income. 

Over 65? No problem!

Just because you’re over 65, it doesn’t mean you can’t have a mortgage!  But sometimes it can be harder to get a mortgage that is right and affordable, due to age restrictive terms, once you reach a certain milestone with the high street lenders.

Often, retired people have managed their finances successfully over the years and enter retirement mortgage free.  At the same time, many, whilst having no mortgage, also suffer from reduced income.  Others may wish to continue their mortgage past normal lender retirement age, whilst they may still be working.  There are schemes where equity can be turned into a mortgage (not necessarily equity release) and where off-spring may be able to assist with the repayments in order to secure and protect their inheritance whilst also ensuring a comfortable retirement for their parents.  This is not right for everyone, but it is certainly worth talking to a qualified adviser to review all possibilities.

According to some lender reports, there are an estimated 600,000 people due to come to maturity on their interest only mortgage by 2020, aged over 60.  Many will probably have no way of repaying their interest only mortgage.  Some will have endowments that didn’t meet expectations, or maybe the house has not increased in price as much as hoped.  Stricter mortgage rules and lending criteria has made it harder for those over 65 wanting to re-mortgage.  However, despite the high street being almost a closed entity, there are plenty of other options (not that your current lender is likely to advise them - they just want their money back!).

The lender has the right to request repayment of their loan at end of the mortgage term.  If the customer has no way of repaying this and has just continued to pay the interest over the last twenty-five years or so, they face the possibility of having their home repossessed or being forced to move out.  On the high street, the end of the loan term will normally hit those aged between 65 to 70.  This is not new news but does highlight that many people are still burying their head in the sand and hoping this will go away or the lender may be lenient.

There are a number of lenders that recognise that 'normal retirement' age is no longer set in stone and people continue to work long in to later life. These are not high street names and as such, rates may be slightly higher than the big super tanker, large volume producing household names that we are used to.  But at least they will consider helping out and could keep you in your family home!

Lending in to later life - age 65+, no problem!

We all know life doesn't end at age 65-70 and neither should it on the high street!  Often, retired people have managed their finances successfully over the years and enter retirement mortgage free.  At the same time, many, whilst having no mortgage, also suffer from reduced income and there is a saying in our profession that it is not always wise to have everything tied up in bricks and mortar and yet have nothing to spend.  Others may wish to continue their mortgage past normal lender retirement age, whilst they may still be working.  There are schemes where equity can be turned into a mortgage (not necessarily equity release) and where off-spring may be able to assist with the repayments in order to secure and protect their inheritance whilst also ensuring a comfortable retirement for their parents.  This is not right for everyone, but it is certainly worth talking to a qualified adviser to review all possibilities.

According to some lenders reports, there are an estimated 600,000 people due to come to maturity on their interest only mortgage by 2020, aged over 60.  Many will probably have no way of repaying their interest only mortgage.  Some will have endowments that didn’t meet expectations, or maybe the house has not increased in price as much as hoped.  Stricter mortgage rules and lending criteria has made it harder for those over 55 wanting to re-mortgage.  However, despite the high street being almost a closed entity, there are plenty of other options (not that your current lender is likely to advise them - they just want their money back!).

The lender has the right to request repayment of their loan at end of the mortgage term.  If the customer has no way of repaying this and has just continued to pay the interest over the last twenty-five years or so, they face the possibility of having their home repossessed or being forced to move out.  On the high street, the end of the loan term will normally hit those aged between 65 to 70.  This is not new news but does highlight that many people are still burying their head in the sand and hoping this will go away or the lender may be lenient..

There are a number of lenders that recognise that 'normal retirement' age is no longer set in stone and people continue to work long in to later life. These are not high street names and as such, rates may be slightly higher than the big super tanker, large volume producing household names that we are used to.  But at least they will consider helping out and could keep you in your family home!

Coming to the end of your interest only mortgage?

According to our good friends at Shawbrook Bank, there are an estimated 600,000 people due to come to maturity on their interest only mortgage by 2020.   Many will probably have no way of repaying their interest only mortgage.  Some will have endowments that didn’t meet expectations, or maybe the house has not increased in price as much as hoped.  Stricter mortgage rules and lending criteria has made it harder for those over 55 wanting to re-mortgage. However, despite the high street being almost a closed entity, there are plenty of other options (not that your current lender are likely to advise them - they just want their money back!).

Come normal retirement age, the lender has the right to request repayment of their loan at end of the mortgage term.  If the customer has no way of repaying this and has just continued to pay the interest over the last twenty five years or so, they face the possibility of having their home repossessed or being forced to move out.  On the high street, the end of the loan term will normally hit those aged between 65 to 70.  This is not new news, but does highlight that many people are still burying their head in the sand and hoping this will go away or the lender may be lenient.  No chance on either.  You may get a one or two year extension, but the lender will want their money back and that you cannot avoid.

We all know life doesn't end at age 65-70 and neither should it on the high street!  Often, retired people have managed their finances successfully over the years and enter retirement mortgage free.  At the same time, many, whilst having no mortgage, also suffer from reduced income and there is a saying in our profession that it is not always wise to have everything tied up in bricks and mortar and yet have nothing to spend.  Others may wish to continue their mortgage past normal lender retirement age, whilst they may still be working.  There are schemes where equity can be turned into a mortgage (not necessarily equity release) and where off-spring may be able to assist with the repayments in order to secure and protect their inheritance whilst also ensuring a comfortable retirement for their parents.  This is not right for everyone but it is certainly worth talking to a qualified adviser to review all possibilities.

There are a number of lenders that recognise that 'normal retirement' age is no longer set in stone and people continue to work long in to later life. These are not high street names and as such, rates may be slightly higher than the big super tanker, large volume producing household names that we are used to.  But at least they will consider helping out and could keep you in your home!

Coming to the end of your mortgage life?

When coming to the end of the mortgage term with your lender, it’s rare to be offered any additional products to stay with them as you are ending the mortgage contract (normally 25 years or more).  They also fail to advise you to seek further advice about re-mortgaging to another provider.  Despite ages possibly having achieved ‘later life’ status, there are options available and although this might cease on the high street, as their maximum ages tend to be between 70 and 75, there are a huge number of lenders who will still lend.  Why should a customer not have a mortgage due to being in advance of normal retirement age?  We know people are working well in to their 70’s now and some are deferring pensions until needed.  So, for the right customer, with the right income and right loan to value of the property, a normal mortgage is still achievable.  These lenders will be building societies, or similar, dotted around the country but having been established for decades, even centuries!  They think outside the box, manually assess and will take a reasoned decision, rather than a computer based ‘tick box’ response.  They will also consider interest only options, assuming there is a suitable repayment strategy in place.

Re-mortgaging away from your current lender should not be looked upon negatively.  Many lenders will cover the cost of surveying your property, as well as covering the legal fees in transferring your mortgage from one lender to another.  But most of all, you should think of number one as this could save you money against your monthly budgets. This can only be a good thing.

Finally, should the above not fit the lenders criteria, Equity Release might be the way forward.   Equity Release provides a valuable option for people in, or close to, retirement who may be wishing to realise additional income, raise funds or to consolidate debt. But it must always be considered alongside other financial options in the light of individual circumstances.  Some providers also allow the interest to roll up, so there are no monthly payments.  However, this obviously reduces the equity available in your property.  Terms and conditions apply and specialist advice should be sought as this can be a very complex matter and can affect future equity.

Lending to those over 70yrs old is not a new thing for AToM!

Rates continue to tumble as the cost of funds remains low and lenders fight to attract your custom. During the last seven days, we have witnessed Halifax reduce some rates by up to 0.30% and Coventry Building Society reduce some of theirs by 0.20%.  Other lenders have reviewed their criteria.  For example, Kensington Mortgages will now consider 100% of a customers annual bonus when it comes to working out affordability (most lenders will only look at 50% of non guaranteed income).  New  lender, Bluestone Mortgages, have reviewed their criteria and will now accept contract workers who only have three months remaining on their contract (normally six months).  In the main, lenders are making positive changes to increase their market share.  Even if you have something you think is 'out of the ordinary' or 'impossible', do explore your options as there might be a lender out there who will assist.
 This does not exclude age either!  Many think that you cannot have a mortgage over the age of 70.  And, on the high street, this may still remain true in some cases as these lenders generally allow a mortgage term to last until the applicants retirement age.  This used to be 65, officially it's now 67, but the reality is it can be much later.  Most lenders increased their maximum age at the end of mortgage maturity to age 70.  However, we all know that people are working a lot longer now and repayment of such a large amount of money may not be possible in these restrictive conditions.  So the option is to raise further finance to repay the original loan or sell the property.  Thankfully, the first option is less onerous as it used to be.  Many non household named lenders will look at lending to customers to a lot later in life, assuming the customers can prove their continued ability to pay.   This can take the maturity age up to age 80, 85 or even 90 and above.  If the customer has a good and regular amount of income, a high level of equity in the property and can satisfy the lenders affordability requirements, then some lenders will be happy to lend.  Seek specialist advice from someone who offers a range of lenders from the 'whole of market', not just a restricted panel or the high street. 

Helping First Time Buyers and Contract Workers

Great to see lenders are seriously looking to assist first time buyers positively.  One example is the Saffron Building Society, who have launched a five year fixed rate under 4%, with only a £495 lender arrangement fee.  Available with just a 5% deposit, this is an attractive product to those looking to get their first property. In addition, the lender will manually assess each application, rather than rely on a computer score based decision. 

Contractors have also been targeted.  For those working on fixed term contracts, who have a minimum of 6 months left on the current contract and a good history, it is possible to get up to 90% of the property value.  In the main, the lenders will work on daily rate, multiplied by five days and forty eight weeks to work out income.  This is then used in the lenders affordability calculations.  Some lenders have no early redemption penalties so the customer can move away at any time.

In our heavily regulated marketplace, lenders main area in making a decision whether to lend, or not, is on your ability to pay the mortgage today, and also in the future.  It's difficult to detail when I have minimal words, but in the main, lenders will stress test all mortgages against a possible rate rise and underwrite the customers based on their ability to pay at the higher rates.  The regulators want lenders to ensure the customer can afford their mortgage for at least the next five years.  So, for example, a shorter term deal may be stress tested at a pay rate of 3% plus 3 percentage points higher than the prevailing rate at origination, so in this case 6%.  Whereas a five year (or longer) deal may be stress tested against the pay rate, which might only be 3% in current climates.  This can make quite a difference when it comes to calculating the affordable loan amount over the first five years of the loan, subject to the lenders terms and conditions.  Longer term fixed rates can also be good for the end consumer as they should get the loan they want, but also the monthly payments remain fixed for the next five or more years.

There are a number of attractive five year deals, some six and also ten year deals currently available.  Potentially great value if you know your plans for the longer term and prefer to fix your monthly payments.

No maximum age on some mortgages..

Halifax have recently carried out a survey and found that many customers are now choosing a longer term in which to repay their mortgage.  Some lenders now offer up to a 40 year term.  Of the First Time Buyers that were surveyed by the lender, 26% took a 35 year term.  Taking a longer term allows the monthly payments to be lower as the costs are spread over a longer period.  However, this also means that interest on the mortgage will be payable for longer.

From one end of the scale, to the other!  Over 65’s were given a boost this week as the Dudley Building Society has scrapped their maximum age limit entirely.  Older borrowers have struggled for sometime when it comes to mortgages in to retirement or later life.  With no limits, and human underwriting, rather than a computer decision, this will allow people to apply for mortgages when they don't conform to 'normal' retirement ages.  With most of the high street lenders wanting mortgages repaid by age 65 to 70 in the main, it's good to have lenders who will cater for those  who may not want to be released from their mortgage as yet, especially if they are continuing to work on or their pension and investment income is at the right level.

The year has started with something of a bang in the mortgage arena and we are already seeing lenders vying for business with new rates, terms, conditions and criteria changes designed to attract new customers.  The later life mortgages being just one such innovation!  Others include new Buy to Let products for both private and Limited Company purchases or re-mortgages. One lender will now do a 100% mortgage on a residential property as long as the applicants can manage the full payments themselves and that 20% of the mortgage can be charged against the equity of a parental property. This product has rates in the mid 3% range too.

Whatever your circumstances, it is possible that there is a suitable lender and product opportunity for you.  Maxims will always include ability to pay, credit history, deposit available, type of property and term required and the lenders overall assessment of affordability.

What is a normal retirement age for mortgages?

You may have seen the Citizens Advice Bureau release research estimating that nearly 1 million people have an Interest Only mortgage with no obvious way of repaying it.  This means that come normal retirement age, the lender has the right to request repayment of their loan.  If the customer has no way of repaying this and has just continued to pay the interest over the last twenty five years, they face having their home repossessed or being forced to move out.  On the high street, the end of the loan term will normally hit those aged between 65 to 70.  This is not new news, but does highlight that people are still burying their head in the sand and hoping this will go away or the lender may be lenient.  No chance on either.  You may get a years extension, but the lender will want their money back and that you cannot avoid.

However, there are a number of lenders that recognise that 'normal retirement' age is no longer set in stone and people continue to work long in to later life.  Many will consider loans ending at the customers age of 80 (maybe to 85) and on a repayment basis, so no loan outstanding at the end of the term.  This is all subject to affordability and will depend on the loan size compared to the value of the property.  These are also not high street names and as such, rates may be slightly higher than the big super tanker, large volume producing household names that we are used to.  But at least they will consider helping out and could keep you in your home!

This also runs in line with recent reports that the top six lenders in the UK are losing market share to the smaller lenders.  Virgin Money, Skipton and Coventry have all posted figures with a year on year increase in excess of 25%.  But where the smaller lenders are really winning is the ability to think outside the box and in some cases, manually assess your application with no credit scoring.  The smaller lenders can be more innovative and change things quickly to suit market conditions and to attract new business.  Don't be shy of a non household name, they could very well be the best lender for your next mortgage move..

Provide as much info as possible at the outset to avoid problems later on.

Mixed updates from lenders this week as some have increased rates and others have reduced them.  Fluctuations do not always correlate to the cost of the funds to the lender.  Sometimes a lender will increase rates to stem the flow of business and, where needed, allow them to catch up and bring their service levels back to within manageable levels.  A few lenders are over a week behind in processing, but the average seems to be two to three days to turn things around.   Speed is a high priority in the current climates. 

The most important thing is to provide as much information and paperwork at the outset as possible.  If a lender wants three months bank statements showing salary credits and rent or mortgage payment debits, that's what they want.  Two months will not suffice and will cause your application to be delayed!  Our world will not ever be paperless, so be prepared to present all items as required and ready to read a lot of small print!

That said, specialist lenders are becoming more accommodating to difficult and complex scenarios.  This can be on the residential side, where family may act as guarantors and allow a charge on their property in addition to the security property.  Or, it could be a non standard construction type property (as seen on TV), that may not be suited to a high street lender.  Or it could be where a landlord rents out a property to a member of their own family.  This is classed as a 'regulated buy to let' and as such, following regulation changes last year, only a few lenders will consider these mortgage applications types at present. 

Others include mortgages for the over 65s / lending in to retirement (life doesn't end at 65!).  Or development projects from first timers to experienced builders.  Many of these are happening in the local area where empty office blocks are being converted in to flats, etc. 

Whatever your requirements, there's probably a lender out there willing to consider your scenario.

Lenders are targeting the Self Employed..

Mortgages for the Self Employed have been sparse over the last few years.  Despite providing a huge part of the economy, lenders have been reluctant to lend to this area.  However,  lenders have now recognised this and are looking more positively to assist the 4.5m self employed (figures as at end of 2014).  A few lenders will now even offer mortgages to those with just one years accounts (up to 85% of the property value), although, in the main, the normal requirement is to have two years audited accounts.  In all instances the lender will need to prove suitable affordability and a deposit will be required, but this is a huge step forward from just a few months ago. 

There are also lenders lending in this arena that will cater for customers who may have a missed mortgage payment in the last 12 months or may have Defaults and/or County Court Judgements (CCJs).   Terms and conditions apply, and lenders must prove ‘responsible lending’, but where there is demand, there will always be supply.

The other area that continues to be on the increase and something of a headache for lenders is ‘lending in to retirement’. As we all know, life doesn't end at age 65-70 and neither should it on the high street!  Often, retired people have managed their finances successfully over the years and enter retirement mortgage free.  At the same time, many, whilst having no mortgage, also suffer from reduced income and there is a saying in our profession that it is not always wise to have everything tied up in bricks and mortar and yet have nothing to spend.  Others may wish to continue their mortgage past normal lender retirement age, whilst they may still be working.  There are schemes where equity can be turned into a mortgage (not equity release) and where off-spring may be able to assist with the repayments in order to secure and protect their inheritance whilst also ensuring a comfortable retirement for their parents.  This is not right for everyone but it is certainly worth talking to a qualified advisor to review all possibilities.

People over 40 yrs old should be able to get a mortgage!

It was interesting to see many of the national press last week covering stories on how difficult it now is to get a mortgage if you are aged over 40.  The articles suggested that many first time buyers are now not able to purchase their first home until they are 40 years old, or even up to 50 years old, report some lenders.  However, this can then limit the availability of mortgage finance, as many lenders want loans to be paid off by normal retirement age (67).  With the Mortgage Market Review (MMR) rules now firmly embedded in the day to day calculation of mortgage finance and lenders making decisions based on the customers ability to pay back what they have borrowed, age can now affect affordability. Especially for the more mature applicant or if a customer wants to retire before the end of the mortgage term.  Of course a shorter term means a hike in monthly repayments which affects affordability issues, and so on. 

Despite many high street and household name lenders setting a maximum age at the end of the mortgage term, usually circa 70 years old, there are an increasing number of smaller building societies and other specialist lenders who will consider a much older maximum age of 80+.  This will be subject to affordability, lending criteria and the customer working or having a defined income long after normal retirement ages.

The rules and regulations are there to protect the end consumer, and in the main are working as required.  We will see criteria relaxed over time, and they will need to be as many customers are now working long in to their later years.

So the bottom line is that just because you are aged over 40, does not mean that mortgage finance is unavailable to you.   But be wary that any lender will want a full and detailed explanation on how you will continue to make your monthly mortgage payments if the term of your loan exceeds 'normal’ retirement age – whenever that may be!