It was interesting to see many of the national press last week covering stories on how difficult it now is to get a mortgage if you are aged over 40. The articles suggested that many first time buyers are now not able to purchase their first home until they are 40 years old, or even up to 50 years old, report some lenders. However, this can then limit the availability of mortgage finance, as many lenders want loans to be paid off by normal retirement age (67). With the Mortgage Market Review (MMR) rules now firmly embedded in the day to day calculation of mortgage finance and lenders making decisions based on the customers ability to pay back what they have borrowed, age can now affect affordability. Especially for the more mature applicant or if a customer wants to retire before the end of the mortgage term. Of course a shorter term means a hike in monthly repayments which affects affordability issues, and so on.
Despite many high street and household name lenders setting a maximum age at the end of the mortgage term, usually circa 70 years old, there are an increasing number of smaller building societies and other specialist lenders who will consider a much older maximum age of 80+. This will be subject to affordability, lending criteria and the customer working or having a defined income long after normal retirement ages.
The rules and regulations are there to protect the end consumer, and in the main are working as required. We will see criteria relaxed over time, and they will need to be as many customers are now working long in to their later years.
So the bottom line is that just because you are aged over 40, does not mean that mortgage finance is unavailable to you. But be wary that any lender will want a full and detailed explanation on how you will continue to make your monthly mortgage payments if the term of your loan exceeds ‘normal’ retirement age – whenever that may be!