Getting a mortgage in later life

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As of April 2014, the criteria lenders must consider when deciding whether to grant mortgages to applicants became further restricted, and despite the fact that many of us will now work well beyond what was once the normal retirement age of 65, Brits over the age of 40 are finding it increasingly difficult to get a home loan.

In fact, research conducted last year by trade body the Intermediary Mortgage Lenders Association revealed that many lenders have lowered maximum age limits due to uncertainty over increasingly strict regulations, leaving 40-year-olds looking for a standard 25-year mortgage with fewer and fewer options. Though your choices may be limited, there are still ways to get onto the property market if you're over 40.

Take a shorter term
Put simply, lenders are concerned about approving mortgages for those who will not pay off the loan before they retire because there's a chance their earnings will decrease when they stop working and they won't be able to afford repayments. The easiest way to get onto the housing market is to therefore accept a shorter term on your mortgage.

If you can cope with a 20-year term or perhaps even less, then lenders will be much happier to provide the money because you should still be working when the mortgage term ends. Many lenders impose a maximum age of 67 or 68, so if you're able to keep up with higher repayments to ensure that you're mortgage free by retirement, you should be able to find a solution.

Prove your income
Many Brits will now work well beyond the age of 65, and while lenders are wising up to this likelihood, they will still be cautious. If you work in an office and expect to continue working until 70, you'll stand a much better chance than if you have a very physical job, so lenders will take your occupation into account.

For those who expect to have a mortgage into retirement, you are likely to need hard evidence of regular income provided by pensions, investments or insurance policies so that lenders will feel more comfortable in the knowledge that you will be able to maintain repayments. However, bear in mind that since pension rules changed and retirees are now able to take their entire pension as one lump sum, which may also give lenders cause for concern.

Another option is to find a guarantor who can prove that they would be able to cover repayments should you fall on tough financial times.

Speak to a broker
There are still firms out there who are willing to lend to older borrowers, with maximum ages of as high as 87 with a loan to value of 80 per cent. Such packages can be fairly complex though, so it is wise to seek advice from a broker. The likes of Capital Fortune offer advice and options, but it is also worth checking with your local independent mortgage broker to see whether they can help.

Are you over 40 and worried about getting a mortgage? Leave your comments below...
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