Mortgages for older borrowers: What options are available?

At a glance

• A growing number of lenders are happy to consider mortgage applications from people over the age of 70.
• If you’re having trouble finding the right deal, or you decide that a traditional mortgage is no longer suitable, there are other products specifically designed for people in later life.
• Seeking the right support is essential, be it through an independent financial adviser or a specialist broker who can take you through the available options.

In today's world, where a growing number of people face the prospect of working well into their later years, it’s hardly surprising that more older borrowers are looking to secure mortgage deals. Once upon a time it would have been difficult to secure lending past traditional retirement age, but happily this is no longer the case, and there are even products specifically designed for this phase of life. Read on to find out more.

What is the maximum age for a mortgage?

At one time, mortgages would typically have a cut-off date of retirement age, in order to avoid people having to make debt repayments on a dramatically reduced income. These days, that’s no longer the case; realising that a lot of people don’t take out their first mortgage until their 30s and beyond, and that many keep working well past traditional retirement age, many lenders are becoming a lot more flexible and have extended their maximum age limits accordingly.

As such it isn’t uncommon to find mortgage completion ages as high as 95, and some lenders have no maximum age limit at all. That said, some will expect you to have repaid your mortgage sooner, but this may simply mean that your mortgage term will need to be shorter. However, different lenders have different criteria and you’ll still need to prove affordability, so be prepared to jump through a few hoops.

There are different age limits you need to be aware of – the maximum age at which you’ll be able to take out a mortgage, and the maximum age for completion.

So, for example, a lender might set a maximum age of 75 to take out a mortgage, but the maximum age of completion could be 85, which means you’ll only be able to have a 10-year mortgage term. Always check the lender’s criteria and make sure it suits your circumstances.

Can someone over 70 get a mortgage?

Yes! Theoretically at least, but as with all kinds of mortgage, it will depend on your individual circumstances – it isn’t so much your age, but rather your ability to repay the mortgage (and prove it) based on your income.

This is particularly important given that the mortgage term will likely be shorter, which means your monthly repayments will be higher accordingly. It may also depend on your borrowing amount, and whether you’re looking to move home or borrow against your existing property, which can all change the criteria. It’s worth getting an idea of how much you may be able to borrow; you can use our mortgage borrowing calculator to get a rough guide.

Bear in mind that while it’s possible to get a mortgage as an older borrower, it can be more difficult, simply because it can be harder to prove affordability. Lenders view this type of borrowing as far riskier because even if you’re still in employment when you take out the mortgage, you’ll likely retire at some point during the term, and so your income will likely decrease even with a pension. Be prepared for extra scrutiny of your finances and a lot of questions on your retirement plans and pension income.

Why might you need a mortgage over 70?

There are any number of reasons that you might want a mortgage in traditional retirement years, but perhaps the most pressing one is that you’ve still got a mortgage that needs to be paid off. In this case, you may want to consider remortgaging to a standard deal (if you’ve got the necessary income to pass affordability checks), or perhaps an interest-only mortgage could be more suitable.

However, it could also be because you want to give your finances a cash boost by releasing some of the equity built up in your home, in which case a type of lifetime mortgage may be the right choice. Once released, you’re free to spend the money as you wish, be it to supplement your income, make home improvements, or even give an early inheritance to your loved ones.

Not sure if you’ll be able to get a mortgage in retirement? Speak to a broker for advice. They can go through your finances to see what kind of borrowing could work for you, and will know the best lenders to approach based on your circumstances. Request a callback from Mortgage Advice Bureau, our preferred broker, to get started.

Mortgage options for older borrowers

As an older borrower, there are few key mortgage types that you can choose from: a standard mortgage, an equity release scheme or a retirement interest-only mortgage, but there may be a couple of other options that are suitable as well.

You’ll want to discuss your retirement and mortgage options with a specialist adviser who will help you reach a decision on the type of mortgage for you based on your individual circumstances, but to help inform your decision, here’s a quick overview of what each option could involve.

Standard mortgage

As life expectancy increases and working patterns change, many lenders are realising that older borrowers simply want to continue with a standard repayment mortgage. This could be entirely possible if you’ve got sufficient income to afford the repayments, and that you meet the lender’s age criteria. Just use our calculator to check how much you may be able to borrow, and make sure you know what income can be used for your mortgage application.

If you’re struggling to prove affordability you may be able to use a “reverse guarantor” as well, which is an option offered by some lenders whereby a younger person is added to the mortgage to act as security should you be unable to make the repayments.

Ultimately the final decision to lend will always be at the lender’s discretion and will be based on your own circumstances. If you’re unlikely to meet the criteria – if you’re planning to retire and won’t have the available income to cover the repayments, for example – other options may be more suitable.

Lifetime mortgage

Equity release (otherwise known as a lifetime mortgage) is a form of later life lending that allows you to release some of the equity built up in your home. You may want to opt for a lump sum plan, which lets you release a single tax-free lump sum at the outset, or you could opt for a drawdown plan, which allows you to release smaller amounts when you need them. (Home reversion schemes are another type of equity release, but these require you to effectively sell all or part of your home to the provider and be given the proceeds, rather than borrowing in the form of a mortgage.)

Interest is charged on the amount released, but unlike with a traditional mortgage, there aren’t any repayments to make during your lifetime – unless you choose to make them – which could make this form of borrowing particularly suitable for those who will have a limited income in retirement. Read more on interest-only lifetime mortgages.

Your equity release provider will decide how much to lend you based on several factors, including your age, the value of your property, and even your medical history. In some cases, certain medical conditions can mean they’re able to lend you more than with a standard plan, and it’s worth bearing in mind that the older you are when you apply, the greater the proportion of your home’s value you can borrow. Read our guide to find out more about how equity release works.

Retirement interest-only (RIO) mortgages

A retirement interest-only (RIO) mortgage is similar to a standard interest-only mortgage in that borrowers only have to repay the interest during the mortgage term, making it a lot more affordable for those on a reduced pension income. Indeed, it’s often used as a way to repay an existing interest-only loan, making it a great option for those who don’t have another way to repay the capital.

The affordability criteria will be easier to meet with a RIO mortgage than a standard repayment one as only interest payments are made. Yet this also means that the capital will need to be repaid at the end of the mortgage term, which is usually achieved on the sale of the property, when the borrower goes into long-term care or passes away. Anything left over from the sale goes to the homeowner’s beneficiaries.

Speak with our preferred mortgage broker Mortgage Advice Bureau and find out if you could be eligible for a RIO mortgage.

Older persons shared ownership (OPSO)

Some borrowers may want to consider an older persons shared ownership (OPSO) scheme, which works in much the same way as standard shared ownership, whereby you purchase a share of the property (typically between 10% and 75%) and pay rent on the rest. The key difference is that you won’t be able to own 100% of the property, but if you have a 75% share, you won’t need to pay rent. There are a lot of criteria you’ll need to meet as well, so speak to your local housing association and/or a broker to find out if it could be for you.

Buy-to-let mortgages

You may want to consider a buy-to-let mortgage if you’ve already got a rental property, or want to invest in one to offer a form of retirement income. In this case the criteria can be similar to standard repayment mortgages – there may be maximum age limits you’ll need to meet in order to qualify, and you’ll need to prove that you can afford the repayments (this may be easier as you’ll be able to use projected rental income in your affordability calculations, but it will depend on the lender). Make sure to speak to a broker if this is something you’re interested in.

Borrowing against your home can be risky at any age, but it can be even more so if you’re on a reduced income. You should only ever take out a mortgage if you’re confident you can afford the repayments, and always seek advice to ensure it’s the right decision for your needs.

Paying for a mortgage in retirement

If you’re opting for a traditional repayment or RIO mortgage, you’ll need to continue making repayments for the term of the loan. Lenders will want to be sure that the mortgage is affordable both upon application and in the future, and most will want the mortgage to be funded by regular income.

They’ll take all sources of income into consideration, including pensions and other investments, to ascertain whether the loan is secure. Ideally, you’ll still be in receipt of employment income, at least initially, because lenders will likely want to see other sources of income besides your pension. Note that if you’ve opted for equity release these concerns don’t apply as you won’t need to make any repayments, but this means there may be less inheritance to pass on to any beneficiaries. Find out more about how equity release can impact inheritance.

How to improve your chances of getting a mortgage as an older borrower

To improve your chances of being accepted, the most important thing you can do is make sure you’ve got the capacity to make the repayments. Essentially, the mortgage lender needs confirmation that the loan can be repaid each month, but if you can’t prove affordability, having a younger relative or friend acting as a reverse guarantor could be another alternative. If you are unable to make repayments, for whatever reason, the guarantor will need to make the repayments instead.

Remember that, as with any mortgage application, any marks on your credit history will affect the underwriter's final decision, so it’s important to make sure that your score is up to scratch. Check your credit score in advance of your application, and find out if your credit rating is good enough for a mortgage in our guide.

But what about when it comes to equity release? In this case the rules are slightly different – you don’t need to prove affordability as the loan doesn’t need to be repaid in your lifetime (unless you opt for a repayment plan, in which case you’ll still need to make sure you can afford the repayments).

Indeed, equity release is often used as a way to boost retirement income, or can even be used to repay an existing mortgage, so could be worth considering for those who don’t have the capacity to fund a more traditional borrowing option.