Am I too Old to Take out a Mortgage?


Owning our own home can be a dream for many people but as we get older we may worry that it will be too late. As a mortgage is repaid over an average of 25 years, then you will need plenty of time to repay it and banks may look unfavourably at anyone who is close to retirement age and wanting a mortgage. However, it is not worth giving up. While it is better to take one out when you are young, there are still options for those that are older.

Get in early enough
The state pension age in the UK is generally when people retire. It is changing though. It used to be 65 for men and 60 for women but now it is 67 for both and is likely to go up. This means that if you want to repay your mortgage before you retire, you may have a few more years than you think. If you are considering a 25 year mortgage then your cut off will currently be your 42nd birthday but you may find that there are other options available. Some lenders will lend to people until they are 70 or 85 though, but this will very much depend on the lender. There are also rules that mortgage lenders have to follow and one of them is that they have to check that you will have a high enough income to cover the mortgage repayments.

Have a good retirement income
If you know that you will have a good retirement income, usually due to having a good pension, then lenders may be happy to allow you to have a mortgage where repayments go beyond retirement. This will very much depend on the lender though and you will have to do research to find out whether any are prepared to lend to you. This might be helped if the mortgage is in joint names and only one named person retires before the mortgage term is up. It can sometimes be easier to prove to a lender that your income is high enough to cover mortgage repayments if you have already retired. This is because pensions are not guaranteed and the amount that you will get is a projection rather than a fact. The income you get depends very much on how well your money is invested while you are contributing to the pension scheme and what pension you manage to buy with the money once you retire. If you have income form other sources, such as from shares, property or other investments then this will go in your favour too.

Save a bigger deposit
It will probably be wise to try to save up a bigger deposit towards the mortgages than the minimum required. This will show that you can be trusted with money and will mean that you will not need to borrow so much money. You then may be able to afford to have a shorter term for the mortgage and therefore have it all repaid before you retire. This will take time of course, but older people may have less financial burdens, perhaps if their children are working and no longer dependent on them, for example. They may also be being paid more due to having more experience. Being self-disciplined enough to make the necessary savings is not necessarily something that gets easier with age though. It can be easier to set up a direct debit to pay a sum of money into a savings account each month, just after payday so that you are putting aside something before you can spend it. By doing this and adding in any money you have left at the end of the month you will be able to build up a decent deposit. You might also want to find other ways of raising extra money, such as selling things you own and no longer need, taking on extra work or working more hours in your job.

You may feel that saving for a deposit will take time and you will be even older when you apply and less likely to get accepted.  Although you will be older if you can save quickly enough, you should be able to outweigh your increase in age with being able to put more money towards the property.

So as you can see, there are some barriers with regards to age when looking for a mortgage and these may also apply when remortgaging. However, there are things that you can do which will make it easier for you to take one out. It is wise to start as early as you can when getting a mortgage though as you will be more likely to have your application accepted. You will need to make sure that you can prove you will have a good retirement income if the mortgage term goes beyond your retirement age. You may also need to build up a good deposit.