How to Get a Mortgage If You’re Over 50
The traditional model for buying a home is to start your career, save for a deposit, and start looking to buy in your late 20s or early 30s. Thanks to the financial crisis of the previous decade, that model does not hold true for everyone.
Some buyers are having to delay because they just do not have the money saved up.
We are now seeing a growing trend of over 50’s looking to buy their first homes. As such, they are also hoping to find specialised over 50’s mortgages. Note that such mortgages do exist. Also note that buyers can do some things that can improve their chances of being approved.
Know Your Terms
First and foremost, getting a mortgage when you’re over 50 requires that you know your terms. Every kind of loan comes with its terms – defined as the total amount of time you have to repay the loan. The terms are especially important to older borrowers because they may have less time to repay what they borrow.
Let’s say you are 55 and looking for a 20-year mortgage. Given that the average life expectancy in the UK is 80 for men and 83 for women, a 20-year deal is doable. Still, it is right on the edge. You would likely find a lot more options if you were willing to take a 10 or 15-year deal instead.
Save a Larger Deposit
Larger deposits make decisions a lot easier for lenders. Imagine seeking a 10-year mortgage with a 50% deposit as opposed to 20%. When the lender looks at the loan-to-value ratio on your application, that 50% deposit is going to look a lot sweeter. It increases the ratio while simultaneously reducing the lender’s risk.
If you have been prevented from buying a house because you haven’t had a large enough deposit, this suggestion may seem out of place. Do not let it discourage you. Rather, let it be an encouragement to spend the next two or three years saving more. Even if you are already in your mid-50s, delaying your purchase to build a bigger deposit will help you in the long run.
Consider a Shared Ownership Scheme
The government offers a shared ownership scheme through its Help to Buy programme. Under this scheme, you purchase shares in a home rather than buying the home itself. The shares you do not own belong to the scheme, and you pay rent to cover those shares. Once in your home, you can continue purchasing shares up to 75%. Reach that 75% threshold and you’ll pay no rent thereafter.
Note that this scheme is only for people 55 and older purchasing a first home. There are income eligibility restrictions as well. You can learn more by contacting the Help to Buy programme.
Work with a Mortgage Broker
The next suggestion is to work with a mortgage broker rather than going directly to banks and building societies. Remember that lenders are naturally afraid of risk. They tend to be nervous of over 50’s who might be asking for mortgages they will not live long enough to repay.
A mortgage broker is a better option for several reasons. First of all, mortgage brokers are financial advisers first. It is part of their job to help applicants look through and understand their financial situations before applying for mortgages. Simply put, a mortgage broker helps the client to understand whether or not home ownership is financially viable.
Mortgage brokers also have access to a wider range of mortgage deals. Even if a broker cannot find you a mortgage with a high street bank, there are likely lots of other options through lesser-known banks and private mortgage lenders.
Finally, be persistent in your search for an over 50 mortgage. They are out there. In fact, over 50’s have more mortgage opportunities today than ever before. Lenders are realising the value of lending to older borrowers who just want to get out of the renting game and into their own properties.
Can you get a mortgage if you are over 50? Absolutely. Doing the things you read about in this article should improve your chances of getting a mortgage deal that is right for you.