For many pensioners, the thought of applying for a mortgage seems out of the question. However, lenders have had to move with the times and so being able to obtain a mortgage as a pensioner is no longer looked upon as 'mission impossible'.
There are some excellent opportunities out there with major banks and building societies now offering mortgage deals with a high maximum age limit (for when the mortgage must be repaid). Here are some tips for taking out a mortgage once you reach retirement age.
Find the right lender for your individual circumstances
There is no general maximum age limit for securing a mortgage, it’s up to the individual loan provider to set their own limit. With people generally living and working to an older age than with previous generations, most banks and building societies have reacted to this changing demographic and raised the maximum age a borrower must be when the mortgage reaches maturity. Here are the maximum age limits of some major high street lenders:
RBS, Nat West: 70 years
TSB, Santander, Virgin: 75 years
Halifax, Bank of Scotland, Lloyds: 80 years
Nationwide: 85 years
Some lenders, such as HSBC, say they would like the mortgage to be repaid by the time the applicant reaches retirement age, but it is prepared to consider individual circumstances.
There are also a number of smaller lenders who have no upper age limit. These include:
Bath Building Society
Cambridge Building Society
Teachers and Verson
Dudley Building Society
National Counties Building Society
Harpenden Building Society
Leeds Building Society
Smaller lenders like the ones listed above are usually more flexible if you need more time to pay off the loan, which can make a huge difference.
These lenders are constantly changing their deals; remember to compare the mortgages on offer within the market to ensure you get the best product possible.
Have the right information on hand
When it comes to the application process, your potential mortgage lender will want to know the following details. You can also find this information from your pension provider:
The date you expect to retire
The current value of your pension pot
Your expected retirement income
You will also need to show you have a good credit history and typically will have to supply additional evidence of post-retirement income asked for by the bank or building society. You should also, in turn, make sure you ask the right questions of your lender such as:
How much can I borrow?
What’s the yearly interest on the mortgage?
What’s the maximum loan-to-value (LTV) allowed?
Contact a mortgage broker
A mortgage broker can be especially helpful when looking for a mortgage once you're in retirement. They’ll use tools like an in-depth mortgage calculator to show what you can really afford as well as which lender is best for you.
Location is key
Don’t settle for a mortgage you’re not entirely happy with just because you feel that, as a pensioner, you need to take what you can get. As well as excellent mortgage opportunities being available, there are some excellent properties to match. Whether you’re looking for a new home or an existing property, you will be able to find a mortgage that is suited to your financial situation.
Keith Osborne is Editor of WhatHouse?