Lenders begin to raise maximum age limit on mortgages

Posted 28 October 2016

More and more mortgage lenders are freeing up their restrictions and offering home loans to people later in life...

As first-time buyers get older and people work for longer, many millions of borrowers are expecting to pay their mortgage until later in life. However, until recently it has been tough for older people to get a mortgage as most lenders have upper age limits on their home loans.

Now, however, figures show that an increasing number of lenders are raising the maximum age of repayment.

Around 30 mutuals will now lend to older borrowers

More and more people are paying a mortgage later in life. Figures from the Financial Conduct Authority show that from 2014-15 there was a 3% rise in the number of borrowers who will be over the age of 65 when their mortgage ends.

With the UK now having 11.6million people over the age of 65, according to the Building Societies Association (BSA), a change to maximum age limits on home loans is becoming a pressing concern.

Now, there are signs that things are beginning to change. At the start of October, the Guardian reports that there were around 30 building societies willing to lend to borrowers up to - and in some cases over - the age of 80.

Figures from the BSA show that are now seven societies which will lend up to age 80, 10 which will lend up to 85, and 13 with no maximum age limit at all.

Many large lenders have changed their criteria. The Leeds Building Society, recently raised its maximum age for residential applications from 75 to 80, while in July, Nationwide unveiled a new maximum age for borrowing of 85, both for existing customers and those remortgaging from other lenders.

In March, meanwhile, Halifax raised its age limit by five years to 80, with the requirement that anyone borrowing beyond retirement must provide proof of income.

“Lenders are reviewing and raising their upper age limit because they recognise people no longer uniformly retire at 65 or 70,” says mortgage expert Brian Murphy.

“They also realise that some older borrowers have got pensions or other incomes that allow them to service mortgage payments well into retirement. It’s reasonable to expect that other lenders who currently have lower upper age limits may well consider raising them in the future.”

If you're an older borrower, the good news is that there are no additional charges or higher rates to pay. Both Nationwide and Halifax says that their rates are no different from those on mortgages for all other borrowers, and that there are no extra costs or insurance requirements.

Many High Street lenders show no sign of raising their age limit

The Guardian reports that while many lenders are changing their upper age limit, others show no sign of budging. Mortgage expert David Hollingworth told the newspaper: "Even though the regulator never placed any specific maximum on the age of a borrower at the end of the mortgage term, the majority of lenders have elected to impose a maximum age of 70-75."

Barclays and NatWest retain an upper age limit of 70, while TSB, Tesco and Santander all require borrowers to pay off their home loan by age 75.

 

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