How your age impacts on a mortgage application

If you're over 40, new rules mean you could struggle to get a mortgage

Updated: 
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Mortgage applications are approved based on the applicant or applicants meeting all the affordability checks.

As you get older, however, and the years of working life that you have a head of you become less and less you will need to prove that you can meet your mortgage obligations potentially into your retirement.

"We complete affordability checks on all our customers, regardless of their age, and these checks looks at the applicants' income and expenditure," explains Jeremy Morcumb, who runs mortgage broker, the Mortgage Advice Bureau.

"If the term of the loan takes the customer past retirement age, but ends before they reach 75, we would consider a loan, but we would first and foremost look to lend on a term that ends before retirement, if this is affordable on earned income."

75 is the cut off
​Although lending into retirement is not uncommon most mortgages are required to be paid off in full by the time the eldest applicant has reached 75. So, if you are over 55 and applying for a mortgage expect to be offered a shorter term than you might previously have been used to.

Consequently, your monthly repayments may be higher than previously and you might be required to put down a higher deposit. To reduce your debt burden once your working days are over, however, it is advisable to pay off that little bit more a month whilst you are working so that the mortgage is repaid when you reach retirement.

Those that do expect to still be paying off a mortgage once they have retired will need to prove that their retirement income will allow them to be able to continue to meet their mortgage payments. You will need to provide evidence of guaranteed income that will be derived from your State pension and any private pensions. Proof of Pension Tax Credits, War Widowers' Pension and War Disablement pension will also be accepted.

Shop around for the best deal
Whilst many of the high street lenders may show some reluctance to take on older mortgage applicants this is predicted to change as the uplift in the economy continues and they get their confidence back.

After all, our ageing population could be big business for them and pension income is pretty much guaranteed whilst income from employment isn't.

In the meantime, older candidates may have more success with smaller building societies who will take the risk in return for slightly less favourable rates. This is where a mortgage broker who is prepared to shop around on your behalf could come in handy.

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