Difficulties of getting mortgages for over 70s

Written by Sam Jones on 18 September 2012.

Due to the current financial climate lenders have been tightening up on lending criteria and maximum age is no exception. The first frustration of individuals looking to obtain mortgages for over 70s are that the majority of high street lenders will simply not consider lending to those in that age bracket.

For those lenders who are prepared to offer mortgages over 70, a maximum age of no higher than 75 generally applies. This coupled with many lenders only offering minimum mortgage terms of five years, can create huge obstacles when guaranteeing adequate income to cover the repayment of the mortgage in its entirety over a five year term.

Traditionally, mortgages are offered to individuals based on their ability to repay the loan through earned income who will be working regularly for the total duration of the mortgage. However when borrowing over 70, income is limited to either an individual’s pension, income from investments or other assets generating an income. This immediately creates a much greater risk for the lender which can have a subsequent impact on the products available over the age of 70.

Given this risk, individuals over the age of 70 are generally frustrated to find the limitation on the types of fixed or discounted deals that are available. This is often despite them having significant equity in their home. Equity however does not produce a recurring income and it is income which pays the monthly mortgage payments, not the security within the property. This is not always appreciated by maturer borrowers and frustration can often exist given the limited options available.

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