Will I be able to get a mortgage at my age?
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I’m 66 and recently divorced. I need to buy myself a house – I’ve been renting since separating. I am retired with a full state pension and a private pension that is bringing in £10,000 a year. I have funds for a deposit of half the value of the type of house I want to buy. Will I be able to get a mortgage for the rest at my age?
Diane Fish of Smith & Pinching responds:
Your age is unlikely to prevent you from getting a mortgage, with an increasing number of lenders happy to lend to borrowers of any age. However, they may well impose a maximum age for the end of the mortgage term – in many cases age 85 – so this will determine the overall term for your loan.
The important thing to bear in mind, whatever your age, is that lenders will expect you to pass all their affordability checks before agreeing to a mortgage. This may limit the amount that you can borrow, particularly with a standard repayment mortgage where you repay interest and capital every month.
An alternative might be a retirement interest-only mortgage. This type of mortgage is designed for those aged 55 and over, and involves paying just the interest on the loan rather than repaying the capital. This can potentially make your mortgage more affordable, but a mortgage offer will still depend on income assessment and overall affordability. The full capital amount and any outstanding interest would be repaid when the property is sold. Interest rates on this type of mortgage may be a little higher than a standard mortgage, but they vary so it’s important to shop around.
Another option you might consider is a lifetime mortgage, which is a form of equity release. With a lifetime mortgage, you borrow against the value of your property, and interest can either be paid during your lifetime or “rolled up” and added to the amount that is due when the property is sold – usually when you go into care or on your death. No income or affordability assessment is undertaken for this type of lending.
I strongly recommend that you get independent mortgage advice before committing yourself to any kind of mortgage.
Your home may be repossessed if you do not keep up payments on your mortgage. There will be a fee for the mortgage advice. The precise amount will depend upon your circumstances, and the type of lending taken. The minimum advice fee is £700. Using equity in your home will affect the amount you are able to leave as an inheritance. Any means-tested state benefits (both current and future) may be affected by any equity released. This is a lifetime mortgage. To understand the features and risks, ask for a personalised illustration. Any opinions expressed in this article do not constitute advice.
For more information, please visit www.smith-pinching.co.uk