If you have ever applied for a mortgage or refinancing and been turned down because of your age, it can be very frustrating – especially if you have a higher income than at any other stage of your life!
Most mainstream mortgage lenders have caps on the lower and upper age limits they will consider, which range significantly but are often:
- Anything from 18+ to 25+ as a minimum.
- Upper limits from 70 and up to 95.
While there are respected mortgage lenders without any age restrictions, mortgage options start to change in your 50s.
It is essential to do your homework before you apply. For example, you might decide to adjust your application, shortening the term to fall below the lender’s age limit – or find a more flexible lender.
Why Do Mortgage Maximum Age Limits Vary?
There is no universal standard that dictates how a lender approaches age limitations.
You might find that one mortgage provider rejects an applicant because you will be, say, 75 when the mortgage ends – whereas another would have no issue lending to someone a decade older.
It is also worth looking at specific later-life borrowing products if you find it tough to qualify for a competitive mortgage rate.
However, a lot depends on the financing you need and your equity in the property.
Mortgage Lender Attitudes to Age-Related Risk
A mortgage lender primarily assesses each applicant to evaluate the potential that they will not be repaid and might end up having to repossess a property to recoup the debt.
Risks can include:
- Financial risk: a loss of employment, drop in income, and inability to keep up with repayments.
- Property risk: the potential that the home falls in value and you end up in negative equity.
- Applicant risk: poor health, entering retirement or moving into a care facility.
The ideal applicant has a great credit record, plenty of disposable income, a large deposit, and no other risk factors, but this is not usually achievable in the real world!
Lenders consider age a potential risk because it can be difficult to judge the likelihood of having a health condition that impedes your ability to continue mortgage repayments.
After retirement, most people experience an income drop, impacting your affordability assessment and the maximum mortgage value you can borrow.
However, you can provide pension statements and forecasts to evidence your anticipated earnings from private pension funds alongside the UK State Pension.
Once you understand the context behind mortgage age limits, it becomes easier to look at ways to structure your application in a way that falls within the relevant lending policies.
Applying for a Mortgage Post-Retirement
As a retired mortgage applicant, a lender will assess the normal factors, such as the length of the term and Loan to Value (LTV) ratio, all evaluated with your age in mind.
It will be a smoother process if you have plenty of documentation to prove your pension income.
Applicants who cannot show the value of their pension or rely solely on a State Pension without any other form of revenue may find it hard to qualify.
There are several potential scenarios:
- The lender caps the mortgage term, depending on their maximum lending age.
- You are asked for a higher deposit or can borrow a lower proportion of your equity to offset the risk.
- The lender approves the mortgage on the strength of your income evidence.
Your regular pension payments (and income from other sources, such as a rental property) are just as vital as overall wealth.
A lender or their mortgage underwriter will consider your debt-to-income ratio and, therefore, how much they reasonably think you can afford to repay each month after other outgoings.
The annual income multiple then applies, usually at around four or 4.5 times your income, so the more you receive per year, the more you can borrow on a mortgage product.
We mentioned later-life mortgages earlier and will explain them in more detail. Still, these products are designed to remove much of the complication of applying for a post-retirement mortgage.
The trade-off is that depending on the exact product, you may be committing to a loan whereby the lender owns your property automatically on your death, which will not be suitable if you expect to pass your home to a beneficiary in your will.
What Mortgage Term Can I Apply for as a Retired Applicant?
Some lenders have two maximum age limits to work around. One is the maximum age at which you can apply (often between 65 and 75).
The other is the maximum age you can be when the mortgage term ends – this is normally around 80 or 90.
While reiterating that some mortgage providers have products without an upper age limit, you will likely need to carefully consider the mortgage term before applying.
For example, if you are 65 and want to take out a new mortgage or remortgage your home, you must select lenders who are happy to consider new applications at this age.
Your next decision is around the term you request.
A standard 25-year mortgage would mean being 90 when you make the final repayment, which is a harder proposition for most lenders than, say, a 10-year mortgage.
Of course, the shorter the term, the higher your monthly repayments and the more you will need to earn to meet the affordability criteria, so shortening a mortgage term is not always an immediate solution.
The best step is to consult an independent broker, who will recommend lenders that can make allowances or consider each application on a case-by-case basis, rather than automatically rejecting applicants over a certain age.
Mortgage Loan to Value Ratios on Retirement Loans
Loan to Value (LTV) refers to the amount you wish to borrow against the total value of your property or the residence you want to buy.
If you can offer a higher deposit, the LTV reduces accordingly and lowers the lender’s risk.
Lenders tend to require a deposit of 25% for mortgage agreements for later-life borrowers.
Although you will find mortgage products with a deposit requirement starting from just 5%, the additional risk of being in retirement makes it more probable that you will need to pay a higher percentage.
Offering a larger down payment is one option to make it easier to qualify for a retirement mortgage.
Interest rates on later-life mortgages are also normally higher, so it makes sense to offer a larger deposit if you can to reduce the overall cost of the borrowing.
Alternative Mortgage Products for Post-Retirement Applicants
Regardless of your age, it is very likely that there is a mortgage product available that suits your circumstances and will provide the borrowing you require.
Standard residential mortgages are just one of the thousands of potential products, although if you meet all the criteria, you can still choose between fixed-rate, variable or tracker mortgage rates.
Below we have listed some of the possible alternatives if a regular mortgage is not right for you:
These equity release products are aimed at applicants of 55 or above.
The loan is secured against the property, which must be a primary residence. You remain in your home for life and do not need to make any repayments.
When you pass away or move into care, the property is sold to recoup the total debt, including any unpaid interest accrued – click here to learn more about Lifetime Mortgages.
Drawdown Lifetime Mortgages
Drawdown Lifetime Mortgages also work on an equity release principle – you sell part of the equity to the loan provider in return for regular cash withdrawals as you need them.
They pay either a lump sum or regular payments to boost your pension earnings and provide a comfortable lifestyle.
The property remains yours, without only interest on the amount borrowed payable, until you leave the property or pass away, although you will need to cover insurance costs and general maintenance.
Retirement Interest-Only Mortgages
Just as in a normal interest-only mortgage, this product works by offering retired homeowners the option of borrowing against their equity and repaying only the interest element of the loan (similar to some lifetime mortgages).
If you choose to sell, move into care, or die, the proceeds are used to pay back the capital loan, with the balance either yours to do with as you wish or passed onto your beneficiaries.
Most Retirement Interest-Only Mortgage products accessible to retirees are available from age 55, although the age caps vary as always.
Later-Life Shared Ownership
The Shared Ownership initiative allows low-income applicants to buy a proportion of a housing association property.
The equity balance remains with the association, and you pay a nominal rent for their share.
Older people’s Shared Ownership works the same way and is open to people aged 55 or over.
Frequently Asked Questions – Maximum Ages in Mortgage Lending
Here we run through some of the frequently asked questions about applying for a mortgage product at 50 or above and the criteria lenders normally apply, depending on your age bracket.
How Easy is it to Find a Mortgage Over 55?
Below we have listed the average likelihood of mortgage acceptance depending on your age:
|Age at Application||Acceptance Probability|
|50 - 60||High||Most lenders are not too worried about applicants below 60, provided they have a stable income.|
|65 - 70||Reasonable||Once you reach retirement age, you will find that some lenders will refuse your application if they have an age cap of 65 or 70.
Others will consider your application as long as they can see evidence of a high enough pension income.
|75 - 80||Moderate||Over 75, mortgage choices become a little more limited.
However, a few lenders consider applicants up to age 80, any other risk factors notwithstanding.
|85 and above||Low||It is fairly difficult to find a mortgage from 85 and above, and even the most flexible lender will likely require a limited-term length.|
Note that this table is intended as a rough guide.
There are multiple variables that a lender considers before deciding whether to accept an application.
For example, if you are 90 with a reliable income stream, say from a portfolio of rental properties, you may qualify for a buy-to-let mortgage product with ease – but find it trickier to take out a residential mortgage for a higher amount or with a low deposit.
What is the Maximum Applicant Age for Most UK Mortgages?
As we have explored in this guide, lenders have various policies relating to age caps.
It is common to find that interest rates creep upwards from age 55. Still, you can usually negotiate if you offset the lender’s exposure, for example, with a larger deposit.
Once you retire or reach 60 and above, you have fewer lender options, particularly if you would like a mortgage for a standard 25-year term.
Shortening that term can be a suitable solution, although that depends on your affordability metrics.
Mortgage applicants over 70 typically rely on pension income to cover the repayments, so evidence of your pension fund value, any lump-sum withdrawals, and your monthly payments are essential.
You will normally be able to apply for a later-life mortgage with a term up to ten or 15 years as a maximum past age 70.
Applicants over 80 will not often be successful if applying to a high street bank or mainstream lender, so the best option is to consult a broker and look at niche mortgage providers.
Expert Advice Finding a Mortgage in Later Life
The irony for many people is that, once they reach age 55, they have greater financial stability and a higher income than ever before – yet find it difficult to qualify for a competitive mortgage!
The mortgage sector is vast and diverse. With a substantial contrast between lender policies and age limit rules, it can be time-consuming to try and unpick the criteria and work out which product will suit you.
If you are looking for a retirement mortgage or applying for a remortgage as you approach retirement, please contact Think Plutus for more information about the various mortgage products explored here.
We strongly recommend seeking independent advice, particularly if you are considering a later-life mortgage that releases equity – but mitigates your ability to leave property to your heirs in your will.