Over 60s

Mortgages for the Over 60s

As a general rule, mortgages are offered to individuals based on their ability to repay the loan through earned income. Consequently, mortgages have traditionally only been offered to those individuals who are young enough to be working regularly for the total duration of the mortgage. For example, in order to take out a twenty-five year mortgage, the lender would want to ensure that the borrower is under forty years of age and expected to work until the time that the whole mortgage is paid off.

This, of course, makes perfect sense. However, in the current climate where many potential borrowers have atypical financial situations and often, for instance, do not rely purely on earned income to pay off the mortgage, lenders are having to become increasingly imaginative with their offerings.

As a result of such factors, more and more lenders are now prepared to offer mortgages to people over the age of 60. Currently, there are around twenty-five lenders that will consider borrowers over the age of 60, approximately twelve that are prepared to lend to people over the age of 70 and there are even a few (albeit a small number) that are prepared to consider borrowers over the age of 80.

How Common is an Over 60s Mortgage

Although it has always traditionally been thought that those reaching retirement age should have little or no mortgage, this trend is now starting to reverse. This is partly due to the increased cost of living and therefore the inability of borrowers to save up large financial buffers to pay off their debts, but is also attributable to the huge rise in property prices that has been seen of late.

Britain as a whole, and the older generations in particular, are becoming increasingly asset rich and cash poor. House prices have escalated dramatically in the last fifteen years, meaning that more and more over 60s have extremely valuable assets in their homes but do not have the necessary monthly income to support a comfortable lifestyle. This issue has become particularly prevalent since the pension crisis has become more widespread. Generally, those who are over the age of 60 are not keen on the idea of moving house in order to release equity, yet they are barely able to afford to live in their current property.

Having a mortgage on a property when you are over the standard retirement age is not in itself a large problem. If the property is worth £200,000 and there is a mortgage of £40,000 outstanding, this will simply be paid off when the property is sold or the owners die. In reality, very few over 60s are in a negative equity situation and, therefore, the mortgage will simply be a liability that has to be taken into account when the estate is finalised.

Based on this, mortgages for the over 60s are actually far more common than you would think. A quarter of all people over the age of 60 have some sort of mortgage debt, with the collective amount of mortgage debt currently standing at approximately £98 billion. The average mortgage debt for those over the age of 60 is £31,000; with the over 70s group appearing to be struggling the most with average debts of £37,000.

Despite these figures, official statistics have revealed that nearly 1.5 million pensioners are living on an annual income of just over £5,000. With the figures for mortgages at their current rates, this would potentially leave the average over 70 year old with just £42 a month, after the mortgage has been repaid. Of course, these are the extreme examples, but more than half of all British pensioners have incomes of less than £15,000 a year, revealing that finding the cash to meet repayments on even a small mortgage can be troublesome.