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Take it to the max

Posted by Mike Carey on 16th May 2016
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Just days after Halifax increased its upper age limit for mortgage borrowers by five years to 80, Nationwide has followed suit and raised the maximum age for mortgage borrowers by 10 years to 85. The building society will grant loans of up to £150,000 to existing, older customers with terms that run up to their 85th birthday, as long as they have a minimum 40% deposit or equity stake and can demonstrate they have sufficient retirement income to cover the repayments. Nationwide said it was part of a series of steps it was taking to meet a growing demand from customers to borrow in later life. This is due to: • Lower pension payouts prompting growing numbers of people work beyond age 65. • Rising property prices and high levels of student debt which can delay younger people getting on the property ladder. • A trend for people to take out longer mortgage terms as affordability becomes stretched. Head of mortgages at Nationwide, Henry Jordan, said: “Access to the mainstream market has been a challenge for older customers, resulting in their needs going unfulfilled and this measure helps to address these needs in a prudent, controlled manner. These customers are often asset-rich with significant equity in their home and they wish to have the flexibility to borrow against it.” mortgage_form.jpg A recent study carried out by Halifax found that a third of 20 to 45 year-olds thought they would have to work beyond the retirement age in order to repay their mortgage. The announcement is great news for older borrowers, many of whom have found it harder to obtain a mortgage following the introduction of tougher lending criteria under the Mortgage Market Review. But it’s is also good news for younger borrowers, who may be planning to delay getting onto the property ladder until later in life. Lenders have been coming under increasing pressure to increase the maximum age of customers. Mortgage brokers have complained of the difficulties people past retirement age face in securing a mortgage, despite the fact they are often very low risk. There is also a clear need for lenders to offer mortgages until later in life, with data from the Council of Mortgage Lenders (CML) showing that nearly 60% of first-time buyers now opt for a mortgage term that is longer than the traditional 25 years. A separate study carried out by the CML in 2015 found that a third of new mortgages would extend beyond borrowers’ 65th birthday.