A few years ago, you’d never get a new mortgage beyond 55. Even recently 70 to 75 was very much the shut-off. Well, there’s now a new home loan you can run until you are 95. It is called the 55+ Mortgage.
This mortgage is not an equity release loan – it is a conventional interest-free mortgage, you repay the interest on the mortgage every month and keep 100% ownership of your property.
It comes from retirement specialist Hodge Lifetime and is currently available through selected mortgage brokers ahead of a broader launch this summer.
This mortgage is a standard residential mortgage, albeit an “interest-only” one, that is available for house purchase or re-mortgage, and which can also be used to fund home improvements or consolidate existing debts. The oldest someone can be when they apply 85, and the maximum term is up to 95. However, if a couple is applying, both criteria relate to the youngest borrower – so, in theory, an 84-year-old married to a 100-year-old could take out this deal.
Unsurprisingly, mortgages that continue into retirement are becoming more common – the population is getting older, with the UK already having close to 12 million over 65s. Moreover, with soaring property costs, student debts and many couples starting to have children later in life, many people are buying their homes later and opting for a more extended repayment term.
The change began last November when Britain’s building societies pledged to review maximum age limits for borrowers.
What do the Mortgage companies have to say?
John Charcol and London & Country are among the brokers offering the Mortgage. Simon Collins, the product technical manager at John Charcol, says: “As we’re living longer and having to work longer, then, by extension, we’re likely to want to borrow for longer, too.
“Yet these experienced borrowers – whose credit records are likely to be exceptionally good – have, in the main, been ignored by the major high street lenders. This product will help bring more competition into this extremely underserved sector.”
There are three rates available for the 55+ Mortgage: a two-year fix at 3.49%, a 3.95% five-year fix, and a two-year discounted-rate deal with a pay rate of 3.3% (the standard variable rate is currently 4.2%).
So if you wanted to borrow £90,000 over a 20-year term, and you took out the five-year fix and added the £995 product fee to the loan, this is how your payments would go. For the first five years you would pay £299.53 a month, then (assuming the deal runs to term) £318.48 a month for 15 years.
Of course, because this is an interest-only mortgage you have to be prepared to pay back the full amount at the end of the term.
What we think:
Hodge Lifetime rates are reasonable you might be able to find a better deal elsewhere. Each mortgage deal is unique, like a fingerprint and you may see some building societies are more flexible than banks.
Epsom-based National Counties building society will consider applicants up to age 89 but will not take into account employment income beyond 70. Deals include a five-year fix at 3.29%.
Marsden building society offers a range of “older borrower” deals including discounted rates starting at 2.49% and two-year fixes from 2.99%.
Bath building society does not have a set maximum age, but looks for proof of continued income, while Harpenden building society has said in the past that it has no age limit on its mortgages.
If you liked this then read “5 Ladies over 60 + a £1.25 million house = a secure older life“