Up to 40 year Term for Mortgage Lending into retirement
The lenders as a collective shied away from Mortgage Lending into retirement following the Mortgage Market Review, and almost 2 years on their retraction is still stopping the longer mortgage terms the consumers want. At Niche Advice we are tasked daily by our clients to find solutions and more and more we can help as new lenders enter the market and the old ones challenge their internal compliance politics.
To be fair to the Regulator they never said that lenders could not lend into retirement (thus preventing a long mortgage term) the directive was; ‘income should be sustainable throughout the mortgage term so repayments remain affordable’.
The Lenders failed to interpret the subtleties and retrenched away from this area of lending altogether and Mortgage Lending into retirement has been a major problem in the last year. The first green-shoots was the movement from 65 years to the new expected State Retirement, which for most home purchasers is 67 years old. As most of the mortgage lenders directly link their affordability calculations to age and term this can be helpful but is hardly the panacea. Read on to find out the best solutions for getting a longer mortgage term for a residential mortgage.
Long Term Mortgages For Residential Properties – Mortgage Lending into retirement
- Retirement age is not an issue. If you are young and simply want to spread your mortgage payments out over the maximum period possible then we can arrange a mortgage up 40 years. Mortgage Lending into retirement is possible as long as we can evidence your income.
- Receiving pension income. It could be that you have retired and your mortgage is modest in size. If you are receiving a private pension as well as the state pension then lending into retirement is a real possibility. The income multiple of the annual earnings is probably going to be in the region of 3.5 to 4 times the total.
- Receiving buy to let income from a portfolio. The key here is the profit returned to HMRC. We have a number of lenders that will apply the same rules as they would for self-employed applicants and will lend to age 75 years.
- Younger person is still working. If the mortgage can be supported solely by the youngest applicant then the term can be set based on their age. This solution can really comes into its own in the case of children that have not left the nest or are on the Right-to-Buy papers, as the lender allows up to 4 applicants.
- Employed applicants to the age of 70. As stated previously lenders normally cap the maximum working age at 65 years or State Retirement Age. However, if your employer allows employees to work to age 70 then we can help on this basis.
- Older retired applicants. The building societies have been making breakthroughs in this area in 2016. One of the more popular solutions lends to retired applicants before their seventy fifth birthday with a maximum age of 105 years at the end of the term. A 25% deposit is required but they will also consider second homes which might suit if you fancy a regular holiday retreat.
- Close to retirement. If you are just 10 years away from retirement we have a conventional mortgage that will lend to you over 35 years providing your pension income makes it affordable. The maximum age of retirement cannot be more than 70 years.
- Equity only. If your property is your main asset and your income is low but you want to ‘free up’ capital then you could consider joint ownership with an Equity Release Lender or Home Reversion Plan. The minimum age is 55 years and there is no maximum age. We have teamed up with experts within this sector to provide you with the best possible solution when it comes to Mortgage Lending into retirement.
For expert solutions for Mortgage Lending into retirement call and speak to me personally on T: 020 7993 2044.
To find out your state retirement age visit the Government website: https://www.gov.uk/state-pension-age).
Author: Payam Azadi
Payam Azadi is a partner at Niche Advice who are whole of the market Independent Mortgage Brokers. His role is very much focused on Property financing both on residential and commercial lines.