Good news for older borrowers

Holly Thomas / 20 September 2016

Older borrowers could gain access to cheaper mortgages, as lenders become more understanding about allowing home loans to stretch further into retirement.



Anyone in their fifties who has been trapped in an expensive mortgage deal due to lenders rejecting applications for new – and cheaper – loans will be relieved that the criteria to qualify is becoming more generous.

How to clear your debts

Unfair assumptions

Banks and building societies are slowly recognising that claiming older borrowers would not be able to afford the repayments when they retire is unfair.

Leeds Building Society is the latest to extend its maximum age for borrowers; this week it announced it will lend to the age of 80 – up from 75.

Richard Fearon, Leeds Building Society’s chief commercial officer, says: “Life expectancy is increasing and our change to the maximum age on mortgage applications acknowledges this fact.

“The age of retirement also is less rigid than it was and many people reaching this point in their life may continue to work full or part time and are stepping back from their careers in a more gradual way.”

The rules around working part time in retirement

Following other lenders

This follows moves by other lenders this summer.

In July, Britain's biggest building society, Nationwide, increased its maximum age for mortgages to 85 – from 75.

Halifax also extended its mortgages to run until the age of 80 – up from 75.

David Hollingworth at mortgage broker London & Country says: “This move from Leeds is clearly a positive one and will help extend the range of options for older borrowers. Leeds BS is a lender that did stick with older borrowers for longer than many so this is a welcome return.”

Things that affect your application for a mortgage

Last year, building societies pledged to review maximum age limits on borrowing, so more are expected to follow suit.

A relaxation of the existing policies will be a welcome relief for anyone hoping to get a better deal on their mortgage.

While interest rates are extremely competitive at the moment – especially for those with large amounts of equity in their home – the standard variable rates (SVR) to which loans revert after the initial fixed rate expires is far higher.

For example, the average two year mortgage is currently at 2.4%, according to data provider Moneyfacts, yet the average SVR is double at 4.8%.

A new option to remortgage instead of sell

Having more borrowing flexibility will also be important for those with an interest-only mortgage and no means of paying off the capital.

Last year Citizens Advice warned that 934,000 homeowners who opted for interest-only mortgages have no way of paying off their loan at the end of its term.

It said time is running out as these mortgages mature over the next few years. Yet some people may be able to remortgage to a repayment loan to avoid having to sell up to pay the debt.

Being able to access borrowing later in life will also help anyone that has gone through a divorce and needs to start again on a new home.

If you are unsure about your options you can speak to a broker. Find one in your area at unbiased.co.uk or vouchedfor.co.uk.

Securing a mortgage when over 50

The opinions expressed are those of the author and are not held by Saga unless specifically stated.

The material is for general information only and does not constitute investment, tax, legal, medical or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Always obtain independent, professional advice for your own particular situation.