Emerging Markets for Mortgages for the over 50s
Whilst a traditional model for buying a home is to start your career, save for a deposit and start looking for a home to buy in your late 20s and early 30s, this model does not hold true to everyone and thanks to the financial crisis of the previous decade, securing mortgages for the over 50s may be able to secure a mortgage easier than they think.
There is a growing market for over 50s to secure a mortgage for their own home, perhaps being late to the party or not saving up for a deposit when younger has left them worried about being denied but, research by Ipswich Building Society shows securing a mortgage over the age of 50 is becoming more popular.
Understanding the Mortgage Terms
First and foremost, getting a mortgage when you’re over 50 requires that you know your terms. Every kind of mortgage comes with its terms – defined as the total amount of time you have to repay the mortgage. The terms are especially important to older borrowers because they may have less time to repay what they borrow.
Let’s say you are 55 and looking for a 20-year mortgage. Given that the average life expectancy in the UK is 80 for men and 83 for women, a 20-year deal is doable. Still, it is right on the edge. You would likely find a lot more options if you were willing to take a 10 or 15-year deal instead.
Save for a Larger Deposit
If you had previously been declined a mortgage because your deposit was not large enough, then waiting a further 2-3 years to increase your deposit may be more beneficial and secure you the mortgage you need. If you are already in your early 50s then spending an additional few years to secure a bigger deposit will help you in the long run.
Saving a larger deposit not only reduces the lenders risk, but looks more favorably in terms of securing you a mortgage. If for example you had a 50% deposit, opposed to a 20% deposit, the lender is likely to favor you and secure you a mortgage when looking at your loan-to-value ratio on your application.
Shared Ownership Scheme
The government is offering a shared ownership scheme for applicants over 55 through its Help to Buy programme. If you use this scheme, you are buying shares in your property, rather than buying the home. You will own the shares you purchase and any shares that are not owned by you, which is up to 75% of shares, are owned by the government.
Once in your home, you can continue purchasing shares up to 75%. Reach that 75% threshold and you’ll pay no rent thereafter, there is however income eligibility restrictions and the fact you need to be over 55 to use this scheme.
Working with a Mortgage Broker
Using an independent mortgage broker has the advantage that they may also have lenders that can help when banks and building societies will not due to risk of lending and tend to be more nervous lending to someone over 50, as they may not live long enough to repay.
Simply put, a mortgage broker helps the client to understand whether or not home ownership is financially viable and this is where Try Financial may be more likely to help secure a mortgage. We have access to lending partners that banks and building societies may not have, as well as exclusive deals that other independent brokers may not be privy to.
We recommend that you be persistent when looking for a mortgage deal that suits you. There are deals available out there, and we may be able to help secure you a mortgage so its always worth having a chat. Lenders are realising the value of lending to older borrowers who just want to get out of the renting game and into their own properties.
Can you get a mortgage if you are over 50? Yes. Why not give us a call on 01473 462288 or email firstname.lastname@example.org to see how we can help, it never hurts to chat and our friendly staff are always on hand to help.