Deciding on the amount that you wish to apply for is more critical as a more mature borrower. The main consideration will usually be the value of the property but other factors such as affordability and any other assets that they may have will play an increasingly important role. Typically, someone with a large disposable income will be able to borrow a reasonably large percentage of the value of the property, whereas a much smaller percentage will be offered to those with lesser disposable incomes.
The length of the mortgage term available differs from lender to lender, so if you are struggling to find a suitable product, you need to speak to a specialist broker.
Unlike other standard mortgages, lenders are less likely to offer an interest only option to mature borrowers but there are some that do. An interest only mortgage means that the monthly repayments are smaller but that the capital of the loan remains outstanding. This requires additional planning to ensure that the finances are in place to clear the capital amount at the end of the term. If not, you will need to be prepared to sell up and downsize to release the cash.
Some lenders will require life cover to be in place for mature borrowers.
Types of Income
In a bid to offer greater flexibility, most lenders will look at the whole of the borrower’s individual financial circumstances. Typically, this will involve looking at all sources of income including pension, income from investments and any other equity. Remember, a lender simply wants to be sure that you can meet the repayments and, if not, that they have suitable security in the property to be able to get their money back.
Another alternative is to have a guarantor. For example, it may be possible for a younger relative or friend to act as a guarantor on the mortgage. This means that, in the event that you are unable to make the repayments, the lender can call on the guarantor to make the repayments instead.