Getting a mortgage when you’re older

We're all living longer lives, according to AgeUK, which highlighted recently that the number of centenarians in the UK has risen by 72% over the past decade.

Many banks and building societies are adapting to account for this and, as a result, it is now possible for older borrowers to get a mortgage. There are many reasons you might be thinking of buying a property or remortgaging in your later years.

Whether you're downsizing now that the ‘children’ have flown the nest, or you've returned from a round the world trip, we have some handy tips on what you should consider before you apply for mortgage finance.

Lenders attach two age limits to their mortgages, one for those taking out a mortgage (normally around age 65-70), and one for paying them off (70-85 years).

As most people are now enjoying a longer, healthier life, many lenders are now reviewing their maximum age limits, says Charlie Blagbrough, Mortgage Policy Officer at the Building Societies Association. ‘Our aim is to make sure that there aren’t creditworthy borrowers in the market who are unable to access mortgage finance,’ he said.

At Nationwide, for example, we've increased our mortgage maturity age from 75 to 85, in a move that forms part of our ongoing plan to bring more flexibility and choice to older borrowers.

Within a few minutes, our mortgage affordability calculator will help give you an idea of how much we could lend you, subject to criteria and application details. You’ll need to have details of your income, any current borrowing and outgoings to hand.

It might be years since you last applied for a mortgage, or this might be your first time. Either way, understanding what lenders will consider can help you be prepared and know what to expect.

1. Your credit score
   Your lender will conduct a credit check to get a detailed picture of your financial history. Think about it as your ‘financial CV’ advises James Jones, Head of Consumer Affairs at Experian. It’s best to think about your credit behaviour at least six months before you apply, check out our guide for five top tips to boost your credit score.


2. Your income source (salary, bonuses, pension)
   Lenders will check how reliable your source of income is and what you can afford to pay each month. If you have a regular income coming in from either a pension or savings this will work in your favour.
   
   Note: New pension freedoms mean that there is now greater access to your pension, but if you choose not to opt for an annuity you could find it even harder to qualify for a mortgage into retirement. As more pensioners opt for drawdown, which means that they leave their money invested and take out cash gradually over time, lenders are left with less certainty about income sources and a greater risk that repayments can't be met. This could also impact your benefit entitlement, tax liability and entitlement to care provision. It’s important to seek professional financial and legal advice before making any decisions.


3. How would your partner or inheritors repay the loan if they had to?
   ‘It’s not a pleasant conversation to have,’ says Blagbrough, ‘but it's important to make sure that your joint mortgage holder, partner or inheritors won’t have to add financial stress to their grief if something happens to you.’ You could consider arranging a Lasting Power of Attorney, so that someone close to you can manage your financial affairs should you become unable to later in life, but make sure that you seek legal advice before taking this step.

But it’s not just people taking out a new mortgage in their forties and fifties who expect to be paying it off as a pensioner, says Blagbrough. ‘Today, it’s becoming much more common for younger people to take out a mortgage with a repayment term that lasts into their sixties, seventies or eighties.’

In fact a BSA study has found that around half of 25–34 year olds say that they may need a mortgage that lasts into retirement. ‘As demographics shift and people buy later and live longer, longer mortgages of 30–35 years are becoming the norm,’ he highlights.

As with any major financial decision, there may be potential disadvantages. Getting a mortgage later in life could have implications, some of the things to consider would be:

• Benefits – if you’re a homeowner who receives certain income-related benefits, such as pension credit, you may be eligible for Support for Mortgage Interest (SMI) from the government for the interest only on your mortgage. SMI also covers the interest on any loans you’ve taken out for certain repairs and home improvements.


• Tax – when you take out a mortgage later in life it’s important you get independent legal and financial advice. Becoming a homeowner is a big shift in your circumstances so you need to be aware of issues such as inheritance tax and the seven-year rule when thinking about your will and potentially passing on your home as a gift. For more information see GOV.UK Inheritance tax.


• Care provision – as you get older your personal circumstances may change because of health problems. You may be faced with having to continue with your mortgage payments while paying care home fees (depending on your personal circumstances). Alternatively, you may need to ensure you have enough equity in your home to pay off any outstanding mortgage balance and still have enough remaining for your care fees if you’re no longer able to stay at home and look after yourself. For information on paying for care see the Money Advice Service.

Nationwide is committed to being a responsible lender which acts in the best interest of its customers. Learn more about our responsible mortgage lending policy.

Find out whether a Nationwide mortgage could help you to take the next step.

All mortgages are subject to underwriting and criteria. Minimum age 18.