Age is an issue of mind over matter. If you don’t mind, it doesn’t matter
AS THE POPULATION in the UK continues to age, there will be an increasing demand for mortgages for the over-50s. People are continuing to work for longer in order to reach their desired retirement lifestyle but also in response to changes in wealth, State Pension provision and to reflect the fact that we are living longer as a society.
This creates a much more challenging hurdle for people to overcome in order to fully retire. Gone are the days of ‘carriage-clock retirement’. The demand for mortgages for the over-50s is due to a number of factors, including the ageing population and the increasing cost of living crisis.
HELP FUND RETIREMENT Increasingly, many people in this age group are looking to remortgage in order to release equity from their property, which they can use to help fund their retirement. Others are looking to switch to a more affordable mortgage deal in order to reduce their monthly outgoings. But whatever the reason, it is clear that there is a growing demand for mortgages suitable for people aged 50 and over. In some instances it may not be possible to obtain a mortgage at any age, because some lenders often impose upper age limits on each mortgage. It’s not unusual to see an upper age limit for new mortgages of 65 to 70, or age limits for repaying a mortgage that range between 70 and 85.
GOOD CREDIT SCORE This means if you’re 50 and planning to retire at 60, you may find it difficult to obtain a mortgage. And if you do secure a mortgage, you may have to repay it before your 70th birthday. This means a term of 20 years instead of the normal 25. A shorter term means more expensive monthly repayments, at a time when your income may fall as you enter retirement. To improve your chances of finding a mortgage, you’ll need to have a good credit score. Lenders will be looking at your credit history to determine whether or not you’re a good candidate for a mortgage. If you have any negative marks on your credit report, you may want to work on repairing your credit before applying for a mortgage.
MONTHLY MORTGAGE PAYMENTS You’ll also need to have a steady income and enough savings for a deposit. Lenders will want to see that you’re able to make your monthly mortgage payments on time and that you have enough money saved up for a deposit. It’s important to shop around and compare mortgage rates from different lenders. We can help you to find the right deal on your mortgage by shopping around and comparing rates that are appropriate for your situation.
LIFETIME MORTGAGE If your mortgage application gets refused, don’t think that’s it. One option is to consider a lifetime mortgage. A lifetime mortgage is a type of mortgage specifically designed for people over the age of 55. With a lifetime mortgage, you can borrow a lump sum of money against the value of your home. The loan is repaid when you die or move into long-term care. A lifetime mortgage can help you release equity from your home without having to sell it. This can be beneficial if you need money for home improvements, medical expenses or other purposes, and can give you peace of mind by allowing you to stay in your home for as long as you like. You don’t have to worry about making monthly mortgage payments, and you don’t have to worry about being evicted if you can’t make them.
PASS ON YOUR HOME TO YOUR HEIRS A lifetime mortgage can also be an effective way to pass on your home to your heirs. If you have significant equity in your home, taking out a lifetime mortgage can help reduce the amount of Inheritance Tax that your heirs will owe. You can use it for most purposes (including paying off an existing mortgage). What’s more, you don’t have to repay the loan until you, or the last remaining borrower, die or move permanently into long-term care.
AFFORDABILITY TESTS Alternatively, if you want to stay in your home, an interest-only mortgage may be another option to consider because it can help reduce your monthly payments. Additionally, an interest-only mortgage can give you more flexibility to afford other expenses, such as healthcare or retirement savings. When applying for a retirement interest only mortgage you won’t be subject to the same affordability tests. It is a loan secured against your home. You pay the interest each month, which means the amount you owe doesn’t increase over time.
>> OVER 50 AND LOOKING FOR A MORTGAGE? << Age is just a number, or so the saying goes, but it does matter if you’re applying for a mortgage. It can be scary to feel like time is against you when it comes to getting a mortgage or remortgaging your home. To discuss your requirements and see how we can help you, speak to Omni Finance – telephone 01424 236903 – email email@example.com
THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE. BUY TO LET MORTGAGES ARE NOT USUALLY REGULATED BY THE FINANCIAL CONDUCT AUTHORITY. OMNI FINANCE IS AN APPOINTED REPRESENTATIVE OF NEW LEAF DISTRIBUTION LTD WHO ARE AUTHORISED AND REGULATED BY THE FINANCIAL CONDUCT AUTHORITY (FCA). FCA NUMBER IS 460421.
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