BORROWING LIMITED BY AGE

In working out what they think a borrower can afford, lenders will consider the borrowers’ ages, since, at some future point, their income may be reduced or stopped altogether. 10 years ago most lenders set a limit of age 65 as the maximum age to which they would lend. This made it difficult for older people to get a long enough mortgage term to make the payments affordable. In recent years, however, this maximum age has moved to 70 for most lenders and even 75 and above for others – depending on the nature of the income the borrowers have.

There is an exception where age can be, in fact, an advantage in borrowing. What are called “Lifetime Mortgages” rely only on the ages of the borrowers and the value of the property. It is only
available for those aged 55 or older and who have considerable value in the property as the level of
borrowing even for the oldest borrowers is capped at about 50% of the property value. For those
stuck with an Interest-Only mortgage coming to an end, a Lifetime Mortgage can provide a useful
exit strategy. For example, a person aged 60 with a property worth £200,000 could get a Lifetime
Mortgage of up to about 34%, i.e. £68,000. One aged 65 could get up to about 38% of the property
value, i.e. £76,000 and a person aged 75 could get up to about 49% of the value, i.e. £98,000 on a
property valued at £200,000. Do contact us if you would like to discuss the options available to you.

BORROWING OPTIONS

A home is also an investment which historically as proven to be one of the best investments one can make. As the mortgage reduces as you pay it off, the share of the property you own (your “equity”) increases. It means that it can also be used as security to raise funds to achieve other objectives you might have in your life.
Your mortgage provider will, of course, want to be satisfied that you can afford to pay back what you are borrowing and will want proof of your income(s). While different lenders calculate affordability in different ways, a good rule of thumb is borrowing being limited to 4.5 times one’s salary or other guaranteed income. So, if your salary was £25,000, most lenders would consider giving you a mortgage of 4.5 x £25,000, i.e. £112,500 (subject to credit status).

THE HOME

Having and protecting a home is a financial priority for most of us. This ensures that we cannot be moved on by a landlord and gives us the freedom to decorate it or change it as we want. As the majority of us do not have the funds to buy a house outright, it means that getting (and paying!) a mortgage is an essential requirement. Currently the property market is pretty static – another result of the political uncertainty. On the plus side, however, this has meant that mortgage interest rates have remained at record low levels. This makes it a good time to take out, or change to, an interest rate fixed for a reasonable term. We consider the five year fixed rates to look pretty attractive. If you have a mortgage, it would be a good time to ring up your lender and find out what they can offer. You can then make other enquiries to other lenders (or using the services of an independent mortgage broker such as ourselves) and decide the best route for you to take.