Mortgage Tips for the Over 70s
If you are aged 70 or over, then you might find it harder to take out a mortgage. Whilst mortgages become harder to obtain the older you get, it is not impossible and there are a number of alternatives available to you.
This is why the team at Equity Release Warehouse have created a list of mortgage tips for over 70s that might help you.
With more and more people living longer, people are also working longer and retiring later. This means that whilst they might have longer to save for their retirement, they also need to make sure that their pension and savings last longer.
Unfortunately, not everyone gets to retirement age with a large pension and savings in the bank.
The gap in housing and mortgage affordability is rising, meaning that the average house buying age is increasing. As a result of this, people are now a lot less likely to pay off their mortgage by the time they hit retirement age.
Whilst getting a mortgage in your 60s and 70s might be harder than it was when you were 20 or 30, it is still possible.
If you would like to hear more about mortgage tips for over 70s, then speak to our team at Equity Release Warehouse.
Are people aged over 70 allowed to get a mortgage?
Whilst many people believe that you aren’t able to get a mortgage if you’re over a certain age, this is in fact not true. Whilst it might be harder for you to get a mortgage if you’re aged over 50, it is not impossible.
Every mortgage lender has their own qualification criteria when it comes to mortgage products. Whilst some lenders make it really easy for borrowers to get a mortgage aged 70 or over, others can make it more difficult.
However, it is important to note that more lenders than ever are offering more products to people aged over 70.
This is because they recognise that people are living longer and retiring older. As a result, they have increased their age limits on some products and created whole new mortgage offers and products to suit older ages.
In fact, more people than ever are living to 100 years old. A study carried out by the ONS found that the number of people in the UK who are 100 years or older has increased by 85% [1].
In addition to this, in the next 50 years the number of people aged 65 or over is predicted to hit 8.6 million people, which is a record high [1].
As a result of this, more lenders are taking note and creating more flexible products.
However, in 2014 the Government introduced the Mortgage Market Review (known in the financial industry as the MMR). The MMR was implemented after the property and housing crash in 2007 – 2008, and aims to ensure that everyone taking out a mortgage can afford to do so.
The MMR takes into account the affordability of your mortgage, looking into your salary, your savings, your age and the value of the property.
This means that before you are offered your mortgage, the lender will perform a stress test on your mortgage, to ensure that you can afford to pay the monthly repayments even if interest rates increase.
This is mainly to ensure that you will be able to pay back your mortgage, even if you decide to retire. In order to ensure this, more lenders have decided to set age limits to their products.
Most mortgage products set the time frame to pay off your mortgage as 25 years.
However, if you try to take out a mortgage aged 70, then your mortgage length will be significantly shorter, meaning that you should expect your monthly mortgage repayments to be higher than usual, as you may only have 10 years to pay it off.
Please call our 24-Hour Helpline: 0330 058 1579
Why would someone over 70 need a mortgage?
When most people think of getting a mortgage, they think of being in their 20’s or 30’s. However, there are also many reasons why people in their 70’s would consider getting a mortgage, too.
Whilst there are still a number of products available to those aged 70 or over, the products for you are simply more restricted and there will be significantly less choice to choose from.
You might need to take out a mortgage aged 70 or over if you haven’t managed to pay off your mortgage on your current house and need to move house for whatever reason.
This might be because you need a bigger house for whatever reason, need to downsize but do not have enough savings or equity to pay in cash.
Alternatively, you might be undergoing a divorce or split, which means that you need to find an alternative place to live.
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Why is it harder to get a mortgage over 70?
Despite there being a number of mortgage tips for over 70s, there are a number of different reasons why it might be harder for someone in their 70’s to get approved for a mortgage.
The biggest reason why it is harder to get approved for a mortgage in your 70s is that you are probably retired and do not have a source of income anymore.
With no income, it is hard for a bank to see how you would be able to pay off your monthly mortgage repayments. If you still work through your retirement or have a part time retirement job, then it might be more likely to get approved for a mortgage.
However, they will still be well aware that you won’t be able to work forever, and will have to retire and stop working in the near future.
Unfortunately, the older you get the harder it is to get approved for a mortgage as the higher the chances are that you will get a life-threatening illness.
If this were to happen, then the bank would be worried that you might pass away before paying off your mortgage.
For this reason, if you do get approved for a mortgage then you might only be offered a short-term mortgage, lasting 10 – 15 years.
This means that your monthly mortgage repayments will be extremely high, and the bank will be concerned about how you will be able to cover these costs once retired.
Whilst you might argue that your pension is your form of income and will cover any mortgage repayments, it is often difficult for banks to confirm for certain how much money you will receive in total for your pension, and therefore difficult for them to commit you to monthly repayments.
If you would like to learn more about mortgage tips for over 70s, then continue reading and speak to our team at Equity Release Warehouse.
Please call our 24-Hour Helpline: 0330 058 1579
Mortgage Tips for Over 70s – How would someone over 70 fund a mortgage?
One of the best mortgage tips for over 70s is to ensure that you can prove that you can pay off you mortgage.
If you choose to take out a mortgage in later life, then you will need to make monthly repayments for the entire length of the mortgage term. If you are aged 70 or over, then this is likely to be 10 – 15 years, which is a huge commitment.
In order to qualify for a traditional mortgage, lenders will need to see proof that you will be able to fund these monthly repayments through some form of regular income.
Pensioners and people aged over 70 are able to fund their mortgage in a number of different ways.
For example, you might choose to get a part time job during your retirement, such as working as a dinner lady, a teaching assistant or taxi driver.
Alternatively, if you are unable to prove that you are able to make these monthly mortgage repayments each month, then you are able to ask a younger friend or family member to act as a guarantor for you.
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Mortgage Tips for Over 70s – What kind of mortgages are available to people aged over 70?
One of the biggest mortgage tips for over 70s is to pick the right kind of mortgage for you and your current personal and financial circumstances.
There are three main mortgage products available to people aged over 70 living in the UK. These mortgages are called Standard Mortgages, Retirement Only Mortgages, and Equity Release Schemes.
In order to establish what kind of mortgage might be best for you, we recommend that you speak to a mortgage adviser or specialist broker who will be able to search the market for the best options for you.
Option 1 – Standard mortgages
Standard mortgages are the most popular across the UK. There are two different types of standard mortgages, which are repayment mortgages and interest-only mortgages.
With a standard repayment mortgage, you have to repay the loan each month, including any interest that is charged onto your loan.
However, the more you pay back the more the overall loan amount will decrease and the more will be paid off and therefore you will be charged less interest.
Option 2 – Retirement Interest Only Mortgages
Interest-only mortgages work slightly differently. With interest-only mortgages, you only have to pay off the interest on the loan on a monthly basis.
However, at the end of your mortgage term you will have to pay off the remaining mortgage amount in one lump sum.
These are not as common as standard repayment mortgages as you will have to show proof that you can pay off the lump sum before being accepted for the mortgage.
Option 3 – Equity Release Schemes
If you do not qualify for a typical or standard mortgage, then you might want to consider an equity release scheme. There are two main types of equity release schemes in the UK, which are lifetime mortgages or home reversion plans.
With an equity release plan, you get access to the equity that has built up in your home. You do not have to repay your loan until after you pass away or move into long-term care. In this case, your house will be sold and the equity release loan will be paid off.
Please call our 24-Hour Helpline: 0330 058 1579
Mortgage Tips for Over 70s – Things to be aware of when taking out a mortgage in later life
When it comes to mortgage tips for over 70s, there are a number of things that you should be aware of.
1. Your inheritance tax will be affected
When you get a new mortgage in later life, then your inheritance tax will most likely be affected.
2. Your later life care will be affected
If you decide to take out a new mortgage in later life then you should be aware that doing so could affect your later life care. For example, if you should become ill then you might have to pay for your mortgage regardless, depending on your financial and personal circumstances.
3. The older you are the harder it is
The general rule of thumb is that the older you are the harder it is to get a mortgage and the shorter the length of your mortgage, which means that your monthly repayments will be higher.
You will therefore have to make sure that you can afford these higher monthly repayments, which is unlikely considering you are probably retired. In addition to this, you will be offered less products with higher interest rates, so there will be less lenders and even less deals available to you due to your age.
4. There are age limits
Whilst you are able to get a mortgage aged 70, there are some age limits to some products and mortgages.
Further below we have highlighted how likely it is that you would be accepted for a mortgage when it comes to those aged 50 – 90 years old [2].
- Aged 50 – it is very likely you will be accepted for a mortgage, and most lenders offer standard mortgages for this age.
- Aged 55 – most lenders offer mortgages to those aged 55 and offer a range of products to suit your age.
- Aged 60 – whilst most lenders offer mortgages to those aged 60, the mortgage term will be reduced to 10 – 20 years, meaning that your monthly mortgage repayments will be higher.
- Aged 65 – if you are aged 65 or over, then some lenders will offer mortgages to you, but would need proof of your pension and ability to pay off your mortgage as you age.
- Aged 70 – if you are aged 70 then you might still be able to get a mortgage but would have to show a significant amount of evidence to show how you will be able to pay off your mortgage over the years.
- Aged 75 – there are only a few lenders who will offer mortgages to those aged 75, and you will have to show evidence of how you will pay your mortgage every month.
- Aged 80 – only a handful of lenders will offer mortgages to those aged 80, and your mortgage term will be only a few years long, meaning that your monthly repayments will be very high.
- Aged 85 – only a small number of lenders will offer you a mortgage if you are aged 85 and your monthly repayments will be very high and your mortgage term will be very short.
- Aged 90 – only one or two, niche lenders will offer you a mortgage aged 90. These are extremely rare and are only offered in certain, very specific circumstances.
If you are aged 70 or over and are considering taking out a new mortgage, then it is important to speak to a mortgage advisor or mortgage broker for advice and support.
5. There are affordability rules and checks
The Mortgage Market Review (MMR) ensures that before being accepted for a mortgage, then lender offering the mortgage must carry out affordability checks before offering them the mortgage.
The lender will not only take into account your age, but your savings, your pension and your current or future income. This is to ensure that you can pay off your mortgage every month comfortably.
This is particularly important with the cost of living rising year on year.
It is important that lenders do this, particularly for those aged 70 or over. This is because by taking out a mortgage in later life, your mortgage term will be shorter, which means that your monthly mortgage repayments will be higher.
6. You can try extending your mortgage term
If you are able to, then you might want to consider extending your mortgage term to lower your monthly mortgage repayments. However, this will very much depend on your age and current state of health.
Please call our 24-Hour Helpline: 0330 058 1579
Mortgage Tips for Over 70s
There are a number of mortgage tips for over 70s which if followed, will go a long way to ensuring that you get approved for a traditional mortgage despite your age.
Below is a lost of helpful mortgage tips for over 70s which you should follow if you want to stand the best chance of getting a mortgage.
1. Put down as a big of a deposit as you can
One of the best mortgage tips for over 70s is to put down a large deposit. The loan to value ratio (LTVR) assesses how much money you need to borrow and the current market value of the house.
The LTVR depends on how much money you are able to put down as a deposit. The higher your initial deposit then the lower the loan to value ratio will be.
The higher your deposit is, the more likely it is that a range of different lenders will accept you for a mortgage.
2. Sort out your spending
One of the other mortgage tips for over 70s is to reduce your spending. If you are looking at getting a mortgage in later life, then you should cut down on how much you spend each month.
You should aim to make sure that all bills are paid on time, that you are not making any unnecessary purchases and that you stay out of your overdraft. You should also ensure that you are paying off any credit cards or credit you might have.
3. Check your credit score
Finally, one of the biggest mortgage tips for over 70s it to get the best credit score you can. Although everyone’s credit scores will vary a lot, a fair credit score is considered anywhere between 580 – 669 and a good credit score is considered 740 – 799. Anything upwards of 800 would be considered excellent [3].
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Equity Release Schemes for Over 70s
One of the best mortgage tips for over 70s is to consider equity release instead of a traditional mortgage.
Equity release schemes are a great option for anyone who does not qualify for a traditional mortgage. With equity release schemes you do not have to repay your equity release mortgage until after you pass away or move into a care home.
The loan will then be repaid from the sale of your house. This means that the equity in your home is passed to you now, rather than your next of kin after you pass away.
The most popular type of equity release is a lifetime mortgage. This allows you to gain access to your equity, tax free.
You do not have to repay anything until you pass away or move into a care home, where your family will then sell your house and use that money to pay off the equity release loan.
Lifetime equity release mortgages are available to anyone aged over 55 years old and who owns their own house in the UK with a value of £70,000 or more.
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1. Lifetime mortgages are popular with over 70’s
Lifetime mortgages are extremely popular with people aged over 70 across the UK. In fact, more people aged 70 – 75 are taking out lifetime equity release loans than ever.
Lifetime mortgages are growing more popular with this age group as the Equity Release Council are introducing more and more standards and regulations across the equity release industry, making it more transparent and fair.
2. Is there an age limit when it comes to lifetime mortgages?
When it comes to lifetime mortgages, each lender has their own rules and regulations. When it comes to age, most lenders usually set their age limit to 85 – 95 years old, which means that it will be available to those in their 70’s.
3. Qualification criteria for lifetime mortgages
If you would like to be considered for a lifetime mortgage, then you will have to pass your lender’s qualification criteria first. Whilst each lender has different qualification criteria, there are some common ones that most lenders use.
You need to be aged 55 or over, own your own home in the UK with a value of at least £70,000. You must have also paid off a lot of your pre-existing mortgage and use the money you get from your equity release loan to pay off the rest of your mortgage.
Someone will have to visit your property to make an accurate valuation, to see how much your house is now worth. They will take into account the quality of your home, whether there is any damage or whether the local area has increased in value or not.
4. You can borrow more money with a lifetime mortgage
If you are aged 70 or over and are wanting to take out a mortgage but are struggling, then you might want to consider taking out an equity release scheme instead as you can typically borrow more.
One of the best things about a lifetime equity release mortgage is that you are able to release anywhere between 20% and 60% of the total value of your home.
However, this very much depends on your age, your current health and the total value of your home.
It is also important to remember that with lifetime mortgages, you will be charged interest on your loan which will be added to your loan amount. You can choose to pay this off as you go, or wait until you pass away so that it can be paid off when you sell the house.
If you would like to learn more about mortgage tips for over 70s then speak to our team at Equity Release Warehouse.
Please call our 24-Hour Helpline: 0330 058 1579
Talk to Equity Release Warehouse
Whilst there are a number of useful mortgage tips for over 70s, as discussed on this page, many people still struggle to get approved for a traditional mortgage the older they get.
If you are struggling to get qualified for a traditional mortgage and are aged over 55 years old, then you should consider applying for an equity release mortgage. Start today by getting in touch with Equity Release Warehouse.
Our friendly and professional team will talk you through the equity release process, and using our equity release calculator will work out the best plans for you.
