The number of residential mortgages for older homeowners has increased as lenders relax maximum ages to 80 years and over.
The latest report from Moneyfacts shows there are 1,341 mortgages with maximum age of 80 years and over giving older remortgage buyers more choice.
After the financial crisis mortgage lenders introduced measures to reduce their exposure to risk and lowered the maximum age allowed at the end of the mortgage term.
Affordability checks limit the amount of borrowing for first time buyers and home movers but older homeowners can only use their pension income to secure a mortgage with a new lender.
This does not apply to buy-to-let landlords as they must have a minimum 25% deposit and show the rental income can exceed 145% of a notional mortgage interest rate.
Extending mortgage age limits
Many mortgage terms end at the age of 75 and lenders are extending the age limits of existing mortgages until borrowers are aged between 80 and 84 years old.
In 2014 there were zero mortgages ending between 80-84 years old and these have increased dramatically to 1,078 products today.
For lenders that do not alter the terms of the mortgage it is possible for homeowners to consider retirement interest only mortgage (RIO) as these can be continued for your lifetime although are subject to affordability checks by the lender.
The following table from Moneyfacts shows the number of mortgages ending for different age ranges up to January 2019.
| Age | Feb-14 |
Feb-14 |
Feb-14 | Feb-14 |
|---|---|---|---|---|
| 65-69 years | 923 | 188 | 19 | 18 |
| 70-74 years | 638 | 735 | 618 | 608 |
| 75-79 years | 1,645 | 2,104 | 1,499 | 1,822 |
| 80-84 years | 0 | 50 | 885 | 1,078 |
| 85+ years | 33 | 72 | 298 | 263 |
| All mortgages | 3,239 | 3,653 | 3,845 | 4,419 |
Mortgage ages of 85 plus years have increased from 33 five years ago to 263 today and for the age range of 65-69 years the number of products has reduced from 923 products to 18 in the last five years.
If you are an older homeowner and you have an interest only mortgage but cannot make interest payments, equity release would allow you to stay in your home and convert your existing loan to a lifetime mortgage without the need to make monthly repayments.
See what the maximum cash you can release to repay an interest only mortgage and the best interest rates using this link:
Free equity release calculator with instant results to repay your current mortgage.
Darren Cook finance expert at Moneyfacts said, softening the maximum mortgage end age is widespread with 72% of all mortgages maturing by age 75 years or over up from 52% in February 2014.
Mortgage lenders more accommodating
With improving longevity people are working beyond traditional retirement age and with many first time buyers aged over 40 it is more common to find mortgages ending later in life.
Lenders attitudes to mortgage age is changing and they may have no alternative but to extend their mortgage term well past the official pension age, says Mr Cook.
Many borrowers are reaching the end of their interest-only mortgage at age 65 and equity release can be used to repay the loan and stay in your home or for downsizing your home and releasing cash.
If you have taken out a lifetime mortgage product more than eight years ago, there are ways of replacing an existing equity release plan that can reduce the cost as interest rates are much lower today starting from about 3.0% pa.
Over the past five years the number of mortgages with age limits of 85 years and over have increased eight times and this is likely to continue as people retire later in life.
For younger home movers lenders are required to check the affordability including income levels, outgoings such as child care, holidays and living costs.
Older homeowners will be subject to affordability checks based on their pension income or income of the younger spouse to ensure they can make the mortgage payments and loan to values based on age for lifetime mortgages.
What are your next steps?
Talk to our London City Mortgage advisers if you are repaying an interest only mortgage, we can recommend the equity release provider and product and manage the application through LCM.
Find out more about the provider offers and latest interest rates to repay your current residential mortgage at this link:
Free equity release quote with providers and products to repay your residential mortgage.
At LCM our mortgage advisers can source lifetime mortgage products to meet your needs. Learn more by using the equity release calculator, property value tracker chart and mortgage costs calculator.
