Fears over property finance in retirement rise

Who will have a mortgage after retirement?

More mortgage borrowers aged between 20 and 29 are expressing concerns about access to property finance in retirement than any other age group.

Who will have a mortgage after retirement?Research conducted on behalf of Ipswich Building Society reveals 39% of people with a home loan are concerned about the availability of mortgages for borrowers aged over 50. And that figure rises to 45% for borrowers aged between 20 and 29.

The research follows recent media reports highlighting cases of lenders denying mortgage applicants access to a loan due to their age.

Some lenders have imposed an upper age limit – often 65 – by which time the mortgage must be fully paid off.  This means those who are approaching retirement may find it harder to find a lender that is willing to provide them with a 25-year deal.

What has caused this change in mortgage lending?

The introduction of the Mortgage Market Review in April 2014 forced all lenders to be responsible for borrowers being able to afford their mortgage. But it is difficult for some larger lenders that use automated processes to assess current or future pension income.

This may be due to retirement still being over a decade away or mortgage applicants having multiple sources of pension income.

Some lenders might also have concerns about joint mortgage applications where one partner has the larger pension. In the event of separation or death, the remaining borrower would be left with an unaffordable mortgage.

The new pension freedoms have also caused some mortgage lenders to be concerned that what would have been secure monthly income is now potentially available to spend in lump sums.

Is it possible to get a mortgage for over 60s?

Many smaller and regional lenders that use manual underwriting will take a pragmatic approach to offering mortgages to applicants aged over 50. This is because their decisions are based on assessing individual circumstances that take into account more complex sources of income.

If you want to apply for a mortgage in retirement or approaching retirement you should consider the following points…

  1. If you intend to continue to work during your retirement, are you in a trade or profession that allows you to continue to work? For example, a manual labourer continuing work into their 80s may be less viable than an IT consultant.
  2. Be prepared and have listed out all your expenditure and income. This includes if you have more than one source of retirement income. If you also have income from a business or shares then have these figures ready too.
  3. Call round lenders and ask about their maximum lending age. This could save you time on wasted interviews!
  4. If you remain unsure then seek the help of an independent financial adviser or mortgage broker. They can spend time to find our needs and help to find the right mortgage lender for you.