Article by Amy Flower - 25th September 2012

Mortgages For Pensioners – The Options

Obtaining a mortgage or re-mortgage is becoming increasingly difficult, if not nearly impossible for people approaching retirement age. Due to the economic downturn, banks and mortgage lenders are becoming less willing to accept an application from a retirement aged customer.

Credit assessors are becoming more aware of the risk factor of accepting a mortgage application from older applicants as their earning potential can decrease considerably if they take retirement during the term of the mortgage.

Also, in the event of default, the prospect of repossessing a pensioner’s home is not one that the banks would like to bear. It is easier simply to decline an application than to take on the risk of not being able to resort to its security should the worst happen.

Many over 60s are finding that they can only get 5-7 year mortgages with the aim to have the mortgage repaid before the normal retirement age, which then reduces the risks for mortgage lenders considerably.

Understandably, pension aged applicants are being asked to provide information on their pension plans and endowment policies when they are making their applications for the providers to assess affordability and to ensure that a living wage remains after the mortgage commitment, which for pensioners is often a much larger cut of their income than for others.

A good proportion of established mortgages have been lent on an interest only basis, where the prospects for repaying the capital sum in full having diminished. Those in this difficult position are now looking to re-mortgage, as the only other option is to sell the property and move into rented accommodation, or downsize if a reasonable level of equity is still held.

Critics have described the current situation as a ticking time bomb.

The Financial Services Authority (FSA) has been criticised for exacerbating the situation by giving the impression that lending to over 60s is a bad idea. In reality, more and more people are getting onto the housing ladder later on in life and are likely to seek a mortgage term beyond the normal retirement age, anticipating that this will continue to stretch further and further out. The demand for mortgages from those over 60 is therefore likely to be a growing one.

The average age of first time buyers in now around 35 - 38 (depending on what research is believed) and may well reach into the 40s by 2025. Unless mortgage terms are reduced from the standard 20-25 years, it is inevitable that going forward, mortgage portfolios will be more heavily populated with pensioner borrowers.

It has been suggested that lenders should be looking at the credit risk of the customer and their ability to repay the money borrowed rather than their date of birth. The ageing population are at risk of being discriminated against if banks remain unwilling to become more flexible, but on the other hand, no-one wants to evict a pensioner from their home.

The UK's First Provider Of Online Credit Reports

Launched 23 Years, 35 Million Credit Scores & 8 Million Credit Reports Ago

The UK's First Provider Of Online Credit Reports

Article by Jamie Mackenzie Smith

20th August 2021

Do I Have a CCJ? How To Find Out

If you have a County Court Judgment (CCJ) in your name, it can have a serious impact on your Credit Score and ability to borrow for the entire time it is active, as well as potentially affect the outcome of the checks carried out by prospective employers, landlords and insurers.

Read More

Article by Paul Anderson-Riley

18th August 2021

How To Download And Print Your Credit Report

There are several different reasons you might need to print or share a copy of your Credit Report, such as assisting a mortgage advisor during an application, showing a specific entry to a lender, or even just to keep a physical copy for your personal records.

Read More

Article by Tom Magor

11th August 2021

Am I On The Electoral Roll? How To Find Out

With the recent conclusion of the Electoral Register’s annual update, it’s vital that you ensure your Electoral Roll information has been added correctly to your Credit Report.

Read More
keyboard_arrow_left

keyboard_arrow_right

We use cookies to optimise your online browsing experience, improve our services and remember your preferences. Cookies are also used for ads personalisation. To consent to our use of cookies, please click 'Accept'.

Alternatively, you can manage cookie settings and find out more by visiting our Privacy Policy.

Accept