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Homeowners offered mortgages aged 85 as lenders raise age limits

The upper age limits for homeowners to be accepted for a mortgage have been increased by the Nationwide to 85 to meet Britain’s aging population.



Nationwide has extended the upper age limit from 75 to 85 due to the growing demand from Britain's aging population.

It means a homeowner, such as first time buyers, home movers and remortgage buyers can secure a 25 year mortgage at age 60 if they can show the repayments are affordable.

The move improves on the Halifax last week extending their age limit from 75 to 80 years although they say borrowing beyond State retirement age would require evidence of income.

As an alternative to residential mortgages, you could consider a home reversion plan where you sell part of your property to a provider or a lifetime mortgage to repay an existing mortgage where repayments are not required.

Britain's aging population

In Britain there are 12 million people over the age of 65 and this is set to increase over the next decade and many have interest only mortgages and unable to repay the loan.

Citizen Advice reported in September 2015 that 934,000 homeowners with an interest only mortgage had no plan for repayment and 432,727 has not even thought about how the capital would be repaid.

If you have an interest only mortgage you may be forced to repay their loan at a certain age such as 70 or 75 and rather than downsizing, the equity release buyer can and agree a lifetime mortgage.

See how much the interest rolls-up by using equity release to repay your current interest only mortgage with this link:
Free equity release calculator with instant figures if you repay your existing mortgage.

The Halifax has said, as demographics and working habits change they will review their products and policies to reflect customer needs including those that work longer.

In response Hodge Lifetime offers both equity release and lifetime mortgages and they would offer terms to those aged up to 95 and no more than 60% loan to value (LTV).

For an equity release plans where you intend to make overpayments greater than 10% of the mortgage, there are a few types of plan structures to consider such as fixed penalty where you know the costs you will pay or gilt based penalty where the early redemption charges can vary.

Lower monthly repayment costs

The move to extend the age limit will reduce the cost of a repayment mortgage and make it more affordable as older homeowners can now repay over a longer time period.

For a homeowner aged 65 with a £100,000 mortgage to be repaid at age 75, an interest rate of 3% would require a repayment of £966 per month.

By extending the term to age 85 the repayment reduces to £555 per month.

Henry Jordan, head of mortgages at the Nationwide said, access to the mainstream market has been restricted for older borrowers.

If you repay your current interest only mortgage using equity release you can stay in your home for your lifetime, you have the choice of paying all or part of the interest as you go or none at all allowing the interest roll-up over time.

The new product from the Nationwide would apply to all its standard mortgages with a loan size limited to £150,000 and a maximum 60% loan to property value usually for remortgage buyers or home movers.

Nationwide has said the loans will be granted for a range of borrowing needs such as house purchase, further advance or raising capital. It is likely that some of this money will be used to help their grandchildren to start on the property ladder as first time buyers.

What are your next steps?

Speak to our London City Mortgage advisers if you intend to repay an interest only mortgage, we can recommend the equity release product and manage the process and completing the lifetime mortgage.

Find out which are the most competitive providers and the interest rate if you are replacing your current residential mortgage using this link:
Free equity release quote with leading providers to repay your residential mortgage.

At LCM our expert advisers can find the solutions to meet your future needs. Learn more by using the equity release calculator, property value tracker chart and mortgage costs calculator.


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