Borrowers over the age of 50 are finding it extremely difficult to secure a new deal. This is because banks and building societies are often reluctant to lend to people who will retire before their mortgage term ends.
As a result, older borrowers are often finding themselves frozen out of the market.
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In addition, there are concerns that mortgage rules which came into force in April 2014 are making it harder for even those in their 40s to get a loan. The rules require lenders to take a tougher approach with borrowers, including scrutinising applicants’ expenditure like never before.
That said, it’s not impossible to borrow in your later years. The key is being able to prove that you can afford it.
Good news for older borrowers
Demonstrate that you can afford your mortgage payments
As part of a move towards responsible lending, City watchdog, the Financial Conduct Authority, wants lenders to be sure borrowers can afford repayments if their mortgage extends into retirement.
While this has prompted some lenders to reduce the maximum age a borrower can be when a loan comes to an end to 70 or 75 – rather than 85 or higher – the watchdog has urged banks not to take a “computer says no” approach.
This means that lenders should base their decisions on a borrower’s ability to meet their monthly repayments, rather than on arbitrary age limits.
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Provide proof of income
If you have already stopped working, or if you are approaching retirement, you need to be able to demonstrate to a lender that you still have enough income to make repayments – and that the mortgage will remain affordable.
This could, for example, be proof of regular income from pensions and investments (such as an annuity), as well as from insurance policies.
In addition, you will need to have a strong credit record. It is always a good idea to check your credit report before applying for any borrowing, to make sure all the information is correct.
A good credit report can increase your chances of getting a mortgage - find out how to improve yours
Some banks are willing to lend to older borrowers
When looking to secure a mortgage as an older borrower, it’s important to realise that not all banks and building societies take the same approach.
Some lenders have realised there is a growing demand for mortgages running past the traditional retirement age.
With this in mind, it is well worth scouring the market to seek out mortgage providers offering the greatest flexibility on age.
Search for a specialist lender
Equally, if you are struggling to get accepted, it may be worth approaching some of the smaller building societies which may take a more flexible approach, as opposed to using an automated system.
As these lenders are more likely to take your particular circumstances into account – this could improve your chances of securing a deal.
It’s also well worth enlisting the services of a broker, as they may be able to access deals specifically designed for older borrowers. This can help you find an option that you otherwise might have missed.
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