Securing a mortgage when over 50

Esther Shaw / 20 April 2015 ( 31 October 2016 )

Rules which came into force last year have made it harder for the over-50s to get mortgages, however, there is still hope. Esther Shaw explains the steps you can take to increase the chances of your mortgage application being accepted.

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.

Increase your chances of getting a mortgage by getting your credit report under control with our free, 30-day trial*.

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.

Age isn't the only factor that can affect your mortgage application - find out more

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.

Check your credit report with Experian's free unlimited 30-day access*.

Experian Credit Expert Get a free 30-day trial with Experian Credit Expert with this special offer.

*A monthly fee of £14.99 applies after your 30-day trial – you can cancel at any time during your trial with no charge. New customers only.

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.