Residential mortgage adviser, Beckie Pepperrell, looks at how lenders assess your income the closer you get to official retirement age.
As you probably know, when applying for a mortgage or remortgage, as part of their affordability criteria, lenders assess your ability to repay the debt each month by looking at your employment and/or self-employment income.
And that is fine, except that when you get to within 10 years of being 67, (the forthcoming state retirement age), if you want a mortgage term past your 67th birthday, the high street lenders will only assess your ability to repay the debt based on your pension income. Your income from employment and/or self-employment (including rental income) will not be considered.
In the main, this applies to lenders which offer mortgages to borrowers up to the age of 75 years at cessation of the loan. Think high street: Halifax, Nationwide, Santander, Virgin…
Once you are older than 56 (lenders take your age at your next birthday to calculate the term) getting a residential mortgage (or remortgage) gets trickier and could result in a lower loan amount than you wanted, a higher interest rate or higher monthly payments if the term is restricted.
There are options...
If you want a mortgage term past the age of 75 we have access to a handful of specialist lenders we can approach. Some will lend to borrowers up to 85+ years. Again, pricing will be higher but, in addition to traditional pension income, these lenders will accept rental income and self-employed income if the business will run regardless of the owner’s health/ability to run the operation, i.e. the business has employees who run it day-to-day.
So why should you remortgage your home before you're 57?
Because you'll get a better deal! Either way, if you are looking for finance, either to purchase or remortgage, do get in touch.
Beckie Pepperrell has left Mortgages for Business for pastures new. For more information or for any questions relating to this blog, please contact the Residential Team on 0345 345 6788, where one of our consultant mortgage brokers will be happy to assist.
ANY PROPERTY USED AS SECURITY, WHICH MAY INCLUDE YOUR HOME, MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
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