Mortgage for  over 60s - The Basics

Mortgage for the over 60's

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Mortgages for the Over 60s

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Mortgages for the over 60's ( Inc: Saga mortgage )



As a general rule, mortgages are offered to individuals based on their ability to repay the loan through earned income. Consequently, 'mortgages over 60s' 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.

The current climate


However, in the current climate where many potential borrowers have typical 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. In addition, lenders are also being forced to take account of age discrimination legislation.

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.

Mortgages for the over 60's ( Inc: Saga mortgage ) - How Common are they


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 taken place since the 1970s.

Britain as a whole, and the older generations in particular, are becoming increasingly asset rich and cash poor. Even though house prices have fallen recently, dramatic increases occurred from the mid 1990s until 2007, 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. Commonly, many of 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 over 60's' 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 32,000; with the over 70s group appearing to be struggling the most with average debts of 45,000.

Official statistics have revealed that nearly two thirds of pensioner couples have a total pension income of less than 10,000 and half of single pensioners are living on an annual income of less than 6,000.

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