Ageism in Mortgages
It has been common knowledge in adviser circles that mortgage providers have been very “tricky” to deal with when the prospective mortgage holders are much more than 55. Even people who would normally be considered to be financially secure have found it difficult to find mortgages to last long enough to suit their circumstances.
The Daily Mail today gives details of a 59 year old man who was refused a 5 year extension to his mortgage so he could fund his daughter’s wedding. (The full article is here; http://www.dailymail.co.uk/news/article-3425810/Ageism-payout-dad-59-old-extend-mortgage-Father-person-complaint-upheld-trying-extend-loan-pay-daughter-s-wedding.html). Now 61, he took a complaint to the Banking Ombudsman over his bank’s refusal to vary his mortgage terms, purely on the basis of his age. He was awarded several thousand pounds as compensation and found a mortgage elsewhere, but not everyone is likely to be so able to make a claim stick. (He had a career at a high level in financial services).
Mortgages these days are often for 30 years, so a house buyer in their 30’s will only become mortgage free in their 60s. Once into your 60s, finding a mortgage into later life will be difficult, as most lenders will refuse to offer mortgages to the retired, although the employed may be offered terms to 75, if they are still in work.
For the older mortgage holder, interest only mortgages can be a real trap for the unwary; the previous option to extend the mortgage and delay final repayment may become unavailable, so the orderly trading down or waiting for the investment to come good may become a headlong rush to rented accommodation. As relatively few residential mortgages are interest-only these days, this is not the problem it might have been, but the amateur landlord with a few properties on interest-only mortgages, to maximise returns, needs to consider a plan “B”.
Remember, borrowing money is not a right; if a provider is not willing to lend to you, you will not be able to do what you want. Discrimination on the basis of age may be illegal, but not lending because you don’t fit their criteria is still acceptable.
For most providers it would be fair to say that:
- Only employed income will be acceptable for mortgage purposes.
- Loan periods will not be extended past an anticipated retirement age.
- Transactions extending past the age of 75 will be highly unlikely under any circumstances.
- Interest only mortgages on Buy to Let properties will also be unavailable to the retired and not available past the age of 75.
Practically, any house purchase in retirement will need to be on a cash or near-cash basis, any interest-only mortgages will need to be settled by selling up or from savings and any ongoing buy-to-let business needs a succession plan before it is too late!
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If anyone is looking for general advice, then please write in to the blog and I would be happy to help with anonymous advice posted here. Alternatively, please call us on 0116 253 5600 and ask to speak to an IFA, (Independent Financial Adviser), for a no-obligation discussion.
If you know you need formal advice, have a look at http://bankfield.net/personal/mortgages/, or ask around for a recommendation, it might even be me.