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Mortgages for over 50s

The closer you get to retirement, the harder you might find it to get a mortgage. But with an ageing population and more people working for longer, there are mortgage deals that could meet your needs in later years. Let’s take a look at the key points. 

The closer you get to retirement, the harder you might find it to get a mortgage. But with an ageing population and more people working for longer, there are mortgage deals that could meet your needs in later years. Let’s take a look at the key points. 

Tobi Owens
From the Mortgages team
4
minute read
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Posted 28 SEPTEMBER 2020

What is the age limit for getting a mortgage?

Each lender sets its own age limit for mortgage applicants. Typically, this is either:

  • your age when you take out a new mortgage, with the limit ranging from around 70 to 85
  • your age when the mortgage term ends, with the limit ranging from about 75 to 95

Regardless of how old you are when you take out a mortgage, you’ll need to be sure you can afford the repayments throughout the full term, including on any outstanding balance after you retire.

If you’re having issues with age limits or repayments, you could consider a lifetime mortgage, which is a type of equity release. However, you’ll need to bear in mind that releasing equity in your property can affect your eligibility for some state benefits and also impacts on what your estate is worth when you die.

Some lenders offer retirement interest-only (RIO) mortgages, which allow you to pay off the interest only, meaning your repayments should be lower. The loan amount is usually paid off when the last borrower moves into long-term care or dies.

Can I get a mortgage after I retire?

If you’ve retired, you could get a mortgage. A lender should accept you for a mortgage if they’re confident that you’ll be able to pay back your loan each month. It should help if:

  • you have a decent amount of savings for a deposit.
  • you have a strong credit score – our guide outlines several things to look for in your credit report.
  • you own your current home outright – if you do, you’ll be able to access some of the equity (money) that’s tied up in your current property. This could be used as an up-front payment on another home or released as a cash lump sum with a lifetime mortgage. With this type of mortgage, there are no required monthly repayments so there’s no need to prove an ongoing income to a lender. However, a lifetime mortgage could affect the value of your estate and entitlement to means-tested benefits.
  • if you can show a lender proof of any ongoing income, you’ll be in a stronger position when applying for a mortgage. Examples could include a private pension or earnings from shares or other investments.

It’s likely that you’ll have a longer history of borrowing as you get older. So, if you’ve proven to be responsible with your money in the past, you might be viewed more favourably by a lender.

The older you are, the stricter the lending criteria will be

Typically, as you get older you’re likely to be offered a shorter repayment period on a mortgage than a younger borrower would (typically, mortgage terms last 25 years). This could be the case even if you’re, say, 15 years younger than the lender’s maximum age for a mortgage. You might also find that you’re offered fewer deals. For example, it might be harder to find interest-only mortgages, which tend to have lower monthly repayments.

If you’re an older borrower and you still have a few years left on your current mortgage, you might want to think about remortgaging instead of finding a new deal. However, while you might be offered better terms by your current lender, you’ll still need to meet their eligibility requirements.

If that still proves difficult, you could use a retirement interest-only (RIO) mortgage or a lifetime mortgage to clear your existing mortgage. With this type of lending, nothing is due for repayment until you’ve passed away or entered permanent long-term care, therefore avoiding strict lending criteria like age limits.

How much can you borrow when you’re over 50?

The amount you could borrow depends more on your financial circumstances than your age, particularly if you’re still years away from retirement. Lenders will consider your monthly income and outgoings, as well as how big a deposit you have.

If you’re over 60, you may only be able to apply for shorter mortgage terms of 10-15 years, while over 70s who have retired may face even tighter restrictions. A shorter loan should be cheaper overall, but the monthly repayments are likely to be higher than a standard 25-year mortgage, so you’ll need to show you can comfortably afford to pay off the mortgage in a shorter time span. The amount you could borrow may be limited, and you’ll probably need a substantial deposit.

However, there are lenders who are flexible and will make a decision based on your personal circumstances, regardless of your age.

When comparing mortgage rates, it’s important to have an idea of what you can afford. Use our mortgage calculator to work out how much you might be able to borrow.

Which lenders offer over 50s mortgages?

Most banks and building societies offer mortgages for people over the age of 50, including Nationwide, Lloyds, Halifax and NatWest. If you’re in your early 50s and still in full-time employment, you’re likely to have a good choice of deals, whether you’re a first-time buyer or remortgaging your home. However, your options become more limited the older you get and the less income you receive.

As mentioned earlier, some lenders – typically regional building societies – offer retirement mortgages, which allow you to borrow money on an interest-only basis. With this type of mortgage, you probably won’t be able to borrow as much as you would with a deal where you also pay down the loan.

What type of mortgages are best for over 50s?

Finding the best mortgage deal depends on how much you’re looking to borrow and for how long, but if you’re over 50 you could choose from all types of mortgage, including:

  • Fixed rate – this type of mortgage has a fixed interest rate for an agreed period, varying from one to 10 years. Your monthly repayment won’t change during this time but will revert to your lender’s standard variable rate (SVR) once the fixed rate ends, unless you remortgage to a new deal.
  • Variable – the interest rate you pay each month can go up or down depending on the lender's mortgage rate.
  • Tracker – with this type of mortgage, the interest rate is tied to the Bank of England base rate. Most tracker mortgages have terms of two or five years.
  • Discount – this offers a discount on the lender’s SVR, normally for a set term of one to five years. Monthly repayments could fall as well as rise.

Some lenders have specialist mortgages aimed at older borrowers, which can make it easier for some people to get a home loan later in life.

How can I increase my chances of getting a mortgage over 50?

One of the reasons it can be more difficult to get a mortgage when you’re over 50 is because lenders expect that your income will fall in retirement. To increase the chances of your application being successful, you need to show potential lenders that you have a solid plan for paying back the money.

As with any mortgage application, lenders will be looking at affordability. They’ll look at your income and outgoings, then ‘stress test’ these to see if you could still afford to make the repayments if something changed – if you retired, for example. To improve your chances before you make your application:

  • make sure all your bills are paid on time.
  • cut down on any unnecessary outgoings.
  • check your credit report and have any mistakes corrected - you can do this for free via the credit reference agencies TransUnion, Equifax and Experian, as well as some banks. Find out more about free credit checks.
  • avoid taking out other loans too close to your application.

If you’re making a joint mortgage application, you’ll also need to consider how your partner would pay back the loan if you were to die.

Remember, all mortgage applications are subject to status and lending criteria, and are based on your individual situation and credit history. Applicants for a mortgage must be UK residents.

Remember too that getting a mortgage is a big commitment in financial terms and your home could be taken off you if you don’t keep up with mortgage repayments.

What will I need to show my mortgage provider?

You’ll need to show evidence of your current income. If the mortgage term is going to extend into your retirement, you’ll also need to provide evidence of what your retirement income will be – a pension forecast, for example.

Can I get equity release as an older borrower?

Equity release is designed for older borrowers. Eligibility for a lifetime mortgage starts at age 55 and, for a home reversion plan, it usually starts at age 60-65.

  • Lifetime mortgages – you take out a mortgage on your main residence in return for a cash lump sum or smaller payouts, but continue to own your home. You can either make repayments or allow the interest to roll up. The loan is paid off when you die or go into long-term care and the property is sold.
  • A home reversion plan – you sell all or part of your home in exchange for a single payment, or regular cash payments. You can continue to live in your home until you die or move into long-term care.

These types of mortgages can be a way of freeing up equity in your home to get a tax-free lump sum. This might be useful in supporting your retirement, but releasing equity may affect your tax position and what your estate is worth when you die. Also, having more cash might impact your eligibility for means-tested state benefits.

Can I port my mortgage if I move home?

Porting your mortgage means taking it with you when you move house. Technically, this is a new loan so you’d need to reapply - and if you’re over 50, this might not be straightforward.

If your lender’s eligibility criteria has changed – they’ve lowered their age cap, for example – or if you’re approaching retirement and your income is going to fall, you could be turned down.

But porting your mortgage may not be the best option in any case. It may be better to switch to a different lender or to take out a new deal with your current lender.

Read our guide to porting your mortgage.

What can I do if I can’t get a mortgage?

Different lenders have different criteria, so it pays to shop around. For fee-free mortgage advice, talk to our partners, London & Country Mortgages Ltd**.

Go to L&C mortgages

About London & Country Mortgages Ltd (L&C)

**London & Country Mortgages Ltd (L&C) are a multi-award winning mortgage broker with over 20 years’ experience in helping people secure their perfect mortgage. Advice is provided by L&C, who are authorised and regulated by the Financial Conduct Authority (143002).

L&C are not part of Compare the Market Limited. Compare the Market receive a % of the commission that our partner London & Country earns. All applications are subject to lending and eligibility criteria.

L&C will not charge you a broker fee should you decide to proceed with a mortgage.

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