The Question
I am 57 and my wife is 52. We have two children who are both at school. We have always rented but have dreamed of getting on the property ladder.
Recently, I came into some money through an inheritance. It’s not a huge amount but it’s enough to put down a 5% deposit on a house in our local area.
I’m worried about our age though. Are we too old to take out a mortgage? I Googled ‘mortgages for over 55s’ and it came up with equity release options. I am self-employed and my wife is a civil servant so we both have good, regular incomes.
Darren’s Answer
Are you too old to take out a mortgage? In short, the answer is no! You can certainly apply for a mortgage.
Here are some key points to think about:
Regarding your deposit, it is important to remember that if you purchase higher than the value of the property, any additional amount will need to be covered by you.
In addition, you will need funds for legal fees relating to the purchase of the property. A solicitor can give you a quote for this so you can budget accordingly.
From a mortgage perspective, lenders will have a maximum age they will go to, which tends to be 80 (often retirement income verification is required). Certain specialist lenders will offer a longer term, which a broker can support with.
From an income perspective, your affordability will be assessed based on your income and outgoings, which will give a maximum amount you can borrow.
Based on your age, if we assume you are retiring at aged 70, then the term would be 12 years or potentially 22 years if we extend into retirement.
Please note that lending into retirement does come with additional verification and checks, which again a broker can help you navigate.
Most lenders will say that retirement income will need to be verified where a mortgage term extends beyond the anticipated retirement age or a maximum working age, 70 or 75.
Affordability will be assessed on the future retirement income to confirm it is appropriate to lend into retirement.
The first step is to obtain a Decision in Principle from a mortgage broker or lender. This is an indication of how much you can borrow. Sometimes a Decision in Principle is also called an Agreement in Principle or a Mortgage in Principle.
It is advisable to speak to a broker who can guide you through the process from start to finish.
Meet our expert…
Darren Polson is head of mortgage operations at Aberdein Considine. He has been writing a regular column for What Mortgage for over two years and is now here to answer YOUR questions.
If you have a question for Darren please email kate.saines@emap.com or leave a message in the comments below.
