Mortgages & Applicant Age Issues

Mortgages are governed by regulation, there is no let up in new regulation and governance of the sector. There is one element that is not regulated, applicant age. Contrary to common belief there is no mandatory maximum age for taking out a mortgage or maximum age for when a mortgage has to finish.

This applies to domestic mortgages and buy to let loans.

A recent survey by Masthaven showed that 61% of over 55’s believed they would have difficulties in getting a loan solely due to their age. Whilst there is a responsibility among lenders not to leave the older generation with a level of unmanageable indebtedness, there also needs to be a focus on affordability and sometimes that is not limited by retirement age.

The issues with age of borrower are only going to increase as the UK population grows older. Mortgage providers need to start moving with the trend.

UK Population

The UK population is getting older with the average age of the borrower rising also. If we look ahead then the challenge over age of borrower is only going to increase:

How lenders react and change waits to be seen however the demand for more flexibility over age is undoubted.

Buy To Let

Age restrictions on buy to let mortgages has eased a little as lenders understand that investment property income and age are not directly linked. Many lenders still have restrictions on age, in part due to how the FCA defines a ‘vulnerable person’ with mortgage lenders not wanting to risk criticism.

There is a conflict between age restrictions on buy to let and the data that exists. If we assume that buy to let owners will also own their own property then the age of the buy to let borrower will become older, the graph below shows the change in first time buyer since 2000:

If you add to this the changing age of the UK population then we have a separation between lender criteria and the borrower they want to attract. Something has to change and only one of these factors is variable.

The Older Applicant

I don’t like using the word ‘older’, it is ambiguous and wholly unquantifiable however there is a trend in buy to let borrowers becoming ‘older’. Whilst many lenders have age restrictions we are seeing some movement and flexibility with age. Different lenders have different criteria and often there is a good deal available even if another lender quotes age as an issue.

I expect to see lenders move their criteria, however if you are uncertain or think your age may be an issue then let me know as there are always options.

By Dave Farmer