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. 

Aldermore have launched a fantastic lending in to later life proposition.

I’ve mentioned lending in to later life a number of times over the last few weeks.  It’s a market that is heavily underserved and one that a number of lenders are looking to assist over the coming months.  At the moment, it’s a product range only really offered by the smaller lenders who can think on a case by case basis and take all things in to consideration. However, just recently, some of the larger lenders are realising what a huge market this is and are taking action.

On the high street, some lenders will now consider applications from those over 55 and allow a term up to their 80^th or 85^th birthdays.  At this point, the mortgage must be repaid.

So credit to Aldermore, a ‘challenger bank’, who have looked at what is on offer, taken many considerations in to account and launched a true alternative to Equity Release in the form of a ‘Lending in to Later Life’ product. 

The key highlights are that you can apply up to a maximum age of 85!  They will allow a mortgage term up to your 99^th birthday and they will consider Interest Only.  They will also consider allowing retired borrowers to remortgage their interest only loan when it comes to an end, using the sale of their property as a means of repaying the debt.

In order to qualify for the interest only option, borrowers must have a minimum of 40% equity in their property and can choose from a range of two, three, five and ten year fixed rate deals.  There is also a variable rate option and if on a repayment basis, the loan can be offered up to 75% of the property value, subject to terms and affordability.

This product will also allow home owners to release capital to help family members with deposits for new properties, release equity to help with future income requirements, pay existing debts, or help with inheritance tax planning, and so on.

Revised rules from the regulators will now allow retired individuals to use their home as repayment of interest only debt, which was restricted only a few years ago.  Therefore, this great Aldermore launch could be the first of many to come... and with only four companies in the UK having access to its limited launch, AToM is delighted to be able to offer this product.       

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.

Mortgages for the over 65's. Yes!

AToM were exhibiting at the excellent Landlord and Property Investor Show at the ExCel over the weekend and in addition to the many Buy to Let enquiries received, there were a huge number from people who thought they could not obtain a Residential mortgage over the age of 70!  

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 normal retirement age.  This used to be 65, it tends to now be 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 than 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.

This is the same with Buy to Let, where at least one lender we have access to allows the applicant to apply right up to age 80, with a 30 year mortgage term!  Many others have no restriction on age either.  Responsible lending and affordability are key in any lenders decision making. 

Age really is no longer an issue and simply needs specialist advice from someone who offers a range of lenders from the 'whole of market', not just a restricted panel of lenders or the high street.

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.

Rates drop and Over 65s enquiries on the up!

Although the majority of mortgage pundits and industry experts are expecting a rate rise towards the end of 2014, or possibly early 2015, at the moment rates are decreasing! There is an apparent rate price war currently in full flow and most lenders are taking part!

Just in the last few days, we've seen Virgin Money reduce some fixed rates by up to 0.26%,  Accord reduce some products by up to 0.40%, Woolwich reduce some products by 0.24%, Halifax reduced some by 0.20%, NatWest decreased some rates by a respectable 0.64%, and hats off to Nationwide who reduced selected rates by a huge 0.70%!

All of these have created a stir in the market place.  It's great for the end consumer and activity is currently high. 

With this in mind, August was a superb month for New Business for AToM and I'd like to thank everyone who has used us to assist with their mortgage requirements.  We've had some fantastic challenges and some great accomplishments in helping arrange mortgage finance for a variety of property types and people!  Do explore all options available to you before signing on the dotted line.

Finally, we have recently noticed an increase in mortgage enquiries for those over the age of 65.   Normally, a high street lender will allow a mortgage term to last until the applicants usual retirement age.  This used to be 65, officially it's now 67, but the reality is it can be much later.  As such, 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 name lenders will look at lending to customers 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 amount of income, a good amount of equity in the property and can satisfy the lenders affordability requirements, then a lender should be happy to lend.  Seek specialist advice. 

Mortgages for the Self Employed or Over 65s

Mortgages for the self employed have, over the years, sometimes been as difficult and as scarce as those for First Time Buyers.   Lenders have noticed this and a few have taken action.  Over the last couple of weeks, we’ve seen some lenders launch products just for the Self Employed.  Specifically aimed at those newly self employed and with minimal accounts.  Although not household names, specialist lenders have funds to lend and a desire to create products to assist gaps in the mortgage market.  For instance, the usual requirement on the self employed is 2 or 3 years accounts and possibly the SA302 returns from the Inland Revenue.  The specialist lenders, for the right deposit, will allow just 1 years accounts to prove income, normally with an accountant projection for the second full year and probably up to six months personal and business bank statements.

Product innovation is key in the current climates, when volume is not necessarily the be all and end all.  As mentioned, specialist products to fill gaps are high in demand.  We’ve seen some lenders insisting on repayment of their mortgage around age 70 regardless of the clients circumstances and others will no longer allow 'sale of property' to be an acceptable repayment option at the end of the term for those currently with interest only.  Customers are seeking solutions.

One lender, through AToM, has provided one solution to the ‘lending in retirement’ conundrum. 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 passed the 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.