How to get a mortgage if you are retired

One of the consequences of the recent changes to mortgage regulation is that it is now much tougher for older borrowers to find the loan they need.

Many lenders have imposed age limits on mortgages while others have changed their underwriting processes making it hard for people who rely on pension or other retirement income. However, while it may be tough to get a mortgage if you're retired, it isn't impossible.

The Independent recently reported the story of a 78-year-old retiree looking for a mortgage in order to move home. Despite approaching four lenders with whom he shares an existing relationship, Dr Adrian Padfield could not get the small loan he wanted.

He told the newspaper: "They all told me that because I'm 78 they can't lend me money. One society said it was government legislation at least two years ago. I think I've read that this is a misinterpretation?"

The 2014 Mortgage Market Review forced lenders to change their criteria and to impose much more stringent checks on potential borrowers. While this was done for the right reasons – to avoid a repeat of the unregulated lending that partly caused the financial crisis – some sections of society have been adversely affected.

Older customers are now finding it much tougher to get the mortgage they need. 'Lending into retirement' has been a key area for lenders and many now require borrowers to have repaid their home loans by the age of 70 or 75.

While banks and building societies can still lend beyond retirement age, they have to ensure that the loan will be affordable both initially and when the borrower retires. This has led to many imposing age limits or making it difficult for people to prove that they will still be able to repay their mortgage when they stop work.

Despite many High Street names implementing age limits and tough rules, there are lenders out there who are happy to consider older clients on a case-by-case basis.

Mortgage expert David Hollingworth explains: "The Family Building Society – which is part of National Counties – does not have a fixed maximum although will generally limit the term to a degree. Meanwhile, Bath Building Society has no maximum age to which it can lend and Metro Bank has also removed any specific maximum age requirement, preferring to take a case-by-case approach."

Keith Osborne, editor of Whathouse.com, says: "Older borrowers will generally be better served by approaching smaller lenders who are able to make individual lending decisions rather than larger banks that operate a 'tick-box' mentality.

"Older customers will need to be able to prove to a lender that they can afford the home loan into retirement. Being able to show guaranteed pension or retirement income is likely to be crucial to getting the loan they need."