Mortgages for the over-80s

There are a few different reasons why you might need to take out a mortgage, including:

• Buying a home. You’ve finally reached retirement and want to buy a home in the countryside away from the hustle and bustle of city life.
• Buying an investment property. You’ve saved up a sizeable nest egg and you’re looking to buy an investment property to bring in some rental income to supplement your pension.
• Buying a place in a retirement village. You may want to purchase a flat in a retirement village. It’s important to remember that retirement properties often tend to depreciate and are hard to sell. Due to this many lenders are unwilling to accept them as security for a mortgage.
• Home improvement. Some people may be looking to get a mortgage to renovate their home by adding a conservatory or to make adjustments to their house to adapt to their changing physical health.

The Equality Act of 2010 makes it illegal for mortgage providers and banks to discriminate against borrowers based on their age.

While it may seem like it means that adults of all ages can get a mortgage, there are some restrictions. That’s because lenders also have a legal obligation to make sure they only lend to borrowers who have provided sufficient evidence that they can afford to repay their mortgage without facing financial adversities.

For example, if you’re 80 years old and you apply for a mortgage with a 25-year term, the lender will view your ability to repay the mortgage with some caution. This is because most people in the UK tend to retire around the age of 65 and there is a drop in their monthly income.

Following the 2008 financial crisis lenders were forced to become more-judicious in their lending practices, which has led to some age restrictions on certain mortgage products. This is why it’s helpful to get the advice of a mortgage broker to find out which lenders offer mortgages suitable for your needs.

If you’re over 80 and applying for a mortgage, you’ll need to provide a greater amount of information regarding your current and future financial position than younger borrowers. If you’re already retired, or about to retire, the less likely you’re to be able to fully repay the money you borrow.

To minimise the level of risk and to also satisfy responsible lending obligations, a lender will ask you to supply detailed information about your employment and the income you earn from all sources, including any pensions you receive. The usual information about credit history and any other outstanding debts and your ongoing expenses is required as well.

One possibility would be to get a guarantor mortgage where a close friend or family member may act as the guarantor.

If you’re over 80 you’re eligible for all types of of mortgages available on the market, such as fixed rate, variable, or offset account mortgages, provided you can provide sufficient evidence that you’ll be able to repay the mortgage. Some lenders even have specialist mortgages for older borrowers that can make it easier to get a mortgage, which include:

• Lifetime mortgage. A lifetime mortgage is a form of equity release that you’re eligible for once you’re 80. Essentially, it’s a mortgage secured on your property, provided it is your main residence, but you retain ownership. You can choose to earmark some of the value of your property as an inheritance for your family. The loan amount and any accrued interest is paid back when you move into long-term care or when you die.
• Home reversion. This is also a form of equity release, except that in this case you sell part or all of your house to a home reversion provider in return for a lump sum or regular instalments. A home reversion allows you to continue living in the property until you die, rent-free, on the condition that you keep up maintenance and insure it. You can earmark a percentage of your property for later use, possibly for inheritance. The percentage you retain will always remain the same regardless of the change in property values, unless you decide to take further cash releases. At the end of the plan your property is sold and the sale proceeds are distributed according to the remaining percentage of ownership.
• Retirement interest only mortgage. These are similar to standard interest only mortgages, except that the loan is usually only repaid when you die, move into long term care or sell the house. To be eligible for this kind of mortgage, you only have to prove that you can afford the monthly interest repayments. While there’s no minimum age requirement, these are generally aimed at older borrowers, who might find them easier to qualify for than a typical interest only mortgage.
• Home Ownership for People with Long-Term Disabilities (HOLD). This scheme applies if you have a long-term disability. You can only apply for HOLD if the properties available through the other home ownership schemes don’t meet your needs, for example, you need a ground-floor property so you don’t have to climb stairs.
• Older People’s Shared Ownership. If you’re aged 55 and older, you can get help from a home ownership scheme tailored for older people. It works in the same way as the general shared ownership scheme, but you can only buy up to 75% of your home. Once you own 75%, you won’t have to pay rent on the remaining share.

Generally, disability benefits are considered a valid form of income by most lenders. Therefore a mortgage application for someone on disability benefits is not treated any differently from an application where someone services their loan with other forms of income.

Like any applicant for a mortgage, the lender will review whether the amount of income support you receive is sufficient for you to comfortably repay the loan.

Most lenders will review your application on a case-by-case basis. Your eligibility for a mortgage will depend on the amount of income you receive and how much of this can be used to service a loan.

Other factors including your age, assets and debts will be assessed by a lender on an individual basis.

Each lender will have different eligibility criteria, so it’s best to speak directly with your mortgage broker or lender to determine whether a mortgage is suitable for you.