Mortgages for over 50’s
There is a popular misconception that once you hit the big “5-0” you are no longer able to obtain a mortgage.
This may have been previously true but this is certainly not the case today. In recent years, the number of mortgage products aimed specifically at this age group has increased significantly. Brunel Independent Mortgages can help you find the right option.
If you are seeking advice for later life lending, it is advisable to obtain the services of an adviser who is qualified to provide advice in all areas of this sector. This will ensure that all your options are fully explored.
At Brunel Independent Mortgages all our advisers have the necessary specialist qualifications to advise you on the full range of options available. These range from traditional mortgages to specialist equity release products. This means that we can provide you with the most appropriate solution to meet your specific requirements.
Over 50’s Mortgage Options
Whilst most lenders will only offer mortgages to the age of 70, it is possible to obtain a mortgage past this age, providing that you have sufficient income to support the loan beyond that term. Lenders will typically accept a variety of income sources, including pensions, income from employment or self employment and may also take into account future income.
Advantages
- Competitive interest rates
- Set up costs are lower than with equity release
- You can usually borrow a higher percentage of your property value compared to an equity release scheme
Disadvantages
- You are committed to regular monthly payments
- Your property can be repossessed if you do not maintain your payments
- You will need to have sufficient income to meet the lender’s affordability calculations
- You may need to pass the lender’s credit score
- Interest rates are not guaranteed for the whole term of the loan and may increase
These mortgages are aimed specifically for those people in receipt of retirement income. They enable you to borrow a lump sum and make interest only payments for the life of the mortgage. This means that the payments are relatively low. Income will be assessed to check that the loan is affordable throughout your retirement. You will have the right to remain in the property as long as you continue to maintain the mortgage payments.
For mortgages in joint names, the lender will need to ensure that the loan remains affordable should one applicant die.
Advantages
- There is no set end date to the loan.
- Interest rates may be more competitive than an equity release scheme.
- Additional overpayments will reduce the capital balance outstanding.
- The outstanding capital balance will not increase if the interest is paid each month.
- Set up costs may be lower than an equity release scheme.
- You can usually borrow a higher percentage of the property value than on an equity release scheme, providing your income is sufficient to meet the lenders’ affordability calculations.
Disadvantages
- You are committed to a regular monthly payment.
- You need to pass a lender’s credit score.
- Interest rates are not guaranteed for the whole term of the loan and may increase
In order to be eligible for equity release you will need to be over the age of 55.
An equity release mortgage can be used to release capital from your existing home or to help purchase a new home. Any existing mortgage will need to be repaid with the proceeds of the equity release or by other means.
There is no requirement to have any income as you are not required to make any payments on the loan. The loan amount available is based on the age of the younger borrower and the value of the property. The older you are, the more capital you can release.
In recent years these products have evolved considerably and now offer much greater flexibility. An example of this is the option of making voluntary repayments of the loan.
Advantages
- You can take the mortgage from the age of 55
- Borrowing is not assessed on income
- The rates can be fixed for the lifetime of the mortgage and there is no end date.
- You retain full ownership of your property.
- The loan is portable to a new property.
- There is a ‘no negative equity’ guarantee.
- It can help with inheritance tax planning.
- You can make voluntary payments of interest and some capital, usually up to 10% of the loan annually.
- A reserve facility may be offered which can be taken at a future date.
- Loans can usually be repaid in part or in full, subject to lenders’ criteria.
Disadvantages
- The value of your estate will be reduced.
- The loan size available may be limited by the value of your property.