Mortgage lenders have rules governing the maximum ages that a borrower can be when their mortgage matures, designed to minimise the number of mortgages that end up in probate.
However, these rules mean that older people who want to remortgage may be forced to shorten the term of any new deal they take on. This pushes up the cost of monthly repayments and could cause them to fail lenders’ affordability checks.
On top of that, some mortgages targeted at older people such as ‘retirement interest only’ mortgages can only be secured based on the income of one person, in the case of a joint application.
These affordability checks could mean that many older people planning to downsize may not be able to borrow as much as they hoped, and could be left looking for other means to find the moving cash, such as equity release.
Some experts say that greater flexibility is needed to allow older movers to make the most of their assets:
Retired borrowers should be allowed to show a greater variety of repayment strategies to unlock lending in later life. These should include plans to downsize, pension drawdown and reverting to lifetime mortgage products at the end of a mortgage term. Such flexibility would be in the spirit of other financial innovations that have sought to make it easier for the over-55s to navigate retirement, namely pensions freedoms.
said Mr Wilkie
How Can Money Savings Advice Help You With A Mortgage?
Here at Money Savings Advice, we have partnered with some of the UK’s leading mortgage brokers. They have already helped thousands of people get the best mortgage deal and they can do the same for you.
Choosing an independent adviser means they won’t recommend a mortgage unless they are sure it is in your best interests. Their advice is also regulated by the FCA, which gives you an additional layer of protection.
If you would like to speak to one of these brokers who can provide you with a ‘whole market quote’ then click on the below and answer the very simple questions.