Money Talk: Can over 55s get a mortgage? Advisors share top deals – ‘it’s never too late!’

Martin Lewis offers advice on how to decrease mortgage interest

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Recently, Steven, 57, wrote to Express Money for further guidance on a securing a mortgage. In the latest instalment of Money Talk, Matt Coulson from Heron Financial, Kevin Roberts from Legal & General Mortgage Club and Katie Brain from Defaqto were all on hand to offer suggestions on mortgages. Steven asked: “Hello. I would like some advice on mortgages please. I’d like to find the best deals for over 55s, or am I too old to be considering this at 57?”

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Kevin Roberts, Director at Legal & General Mortgage Club responded to the query, stating: “57 is certainly not too old to be considering your mortgage options. A growing number of people in Britain are taking mortgage debt into retirement while others are taking out mortgages to downsize or make home renovations.

“For those approaching or in later life who need to find a mortgage, there are a growing number of options including traditional fixed rate mortgages, as well as specialist products like equity release which are only available to people aged 55 and over.

“Knowing which one is ‘right’ for you is all dependent on your individual circumstances and needs, so the most sensible first step to understanding which to choose should be seeking professional advice. An independent mortgage adviser will take into consideration things like your retirement income, spending and later life plans to make an informed decision about which options best suit your needs.

“The retirement lending market is growing and there are now many more specialist products for the over-55s. A lifetime mortgage, often referred to as equity release, is one of these options and allows homeowners aged 55 and over to unlock a portion of their housing wealth as either a cash lump sum or even as a monthly income.

“Equity release customers are not subject to affordability testing and do not need to make interest or capital repayments. Instead, on a typical lifetime mortgage interest rolls up over time and the outstanding debt is repaid when the borrower either passes away or enters long-term care.

“Finally, Retirement Interest-Only mortgages, or RIOs, are another option. These are just like residential interest-only mortgages but with two key differences. Only people aged 55 and over can qualify and lenders do not require you to repay the outstanding balance by a final age or date. This is because, just like with equity release, your lender will recover the outstanding balance from the property’s value after you either pass away or enter long-term care.

“There are still other affordability checks when applying for a RIO mortgage, so it remains important to reach out to an independent mortgage adviser to understand which options would be best suited to you.”

Also on hand to offer help when it comes to securing a mortgage slightly later in life was Matt Coulson, Director at Heron Financial.

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Mr Coulson concurred with Mr Roberts, stating it was never too late to secure a mortgage.

He said: “Firstly, I would suggest approaching your high street lenders as a good starting point. These traditional lenders are far more open to having a conversation with older borrowers than they were even five years ago. Potential borrowers will need to be prepared to answer questions about how they plan to repay their mortgage beyond retirement age, but as long as they have a secure means by which to do so, they should have plenty of options available to them.

“For those who are slightly older, retirement only (RIO) mortgages can work well. RIO mortgages have recently moved from the specialist to the mainstream mortgage market. Rates have started to move downwards as competition amongst lenders increases, which has made these products much more accessible to certain borrowers.

“There has been a steady increase in demand for RIO mortgages and lenders are responding by designing ever more innovative solutions to meet this demand. This is particularly the case with many older applicants, classed as over 65s, who are heading towards the end of an interest only mortgage and don’t have any method of repaying that mortgage. In response, lenders are coming up with solutions to help borrowers to avoid heading off a cliff edge.

“Before considering a RIO mortgage, applicants would benefit from speaking to an adviser who can give them a view of all the options. This could include downsizing rather than taking out a new type of borrowing to replace their existing borrowing, or potentially equity release.”

Mr Coulson also highlighted equity release as a potential option for some older people to consider.

He stated the option is becoming far more popular, with lenders offering a wider range of products to suit different people.

However, he did issue a warning, stating: “Given the complexities of equity release products, potential borrowers should always seek guidance from a specialist equity release adviser or lender.”

Finally, on hand to offer the latest data on mortgages for over 55s was Katie Brain, Insight Analyst at Defaqto.

Ms Brain broke down the key data, as shown in our Express Money tables, demonstrating there are a wide range of options out there when it comes to securing a mortgage in later life.

She concluded by offering one piece of advice, for all Britons who are looking to secure a mortgage.

Ms Brain said: “If you have a mortgage, you could consider an offset mortgage product as a way to make the interest work harder for you.

“Always seek advice if looking at offset mortgages because the interest rates can be higher and they are not suitable for everyone.”

Disclaimer
By necessity, this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. Details correct at time of publication.

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