Tips on getting a mortgage later in life
We often think of mortgages as something that is taken out by someone in their 20s or 30s and lasts the majority of their life. But it is becoming increasingly common that people need to take out mortgages later in life, potentially even carrying on until past their retirement age.
Of course, doing so comes with a range of challenges and you might even find just getting accepted for this type of mortgage is difficult. Here we take a look at some tips for getting a mortgage later in life.
The first thing to say here is that taking out a mortgage late in life can be very challenging and present a number of issues that you will need to deal with. It is important to really assess the whole situation and ensure that you are making the right decision.
No matter whether you are looking to create the most comfortable living situation in retirement, or you are interested in investing money in the housing market, you need to understand the reasons you are choosing to get a mortgage that will last into your retirement.
It is essential that you should take independent financial advice regarding a mortgage later in life. Every individual situation is different and warrants the attention of an impartial specialist to help you choose the right way forward. They will be able to give you information and present a wide range of options that might be suitable.
If you want to improve your chances of getting a mortgage later in life, it is actually relatively simple: have a clear plan of how you are going to pay the lender back. If you choose a mortgage plan that you can sensibly afford you are much more likely to get it accepted.
Of course, it is also vital that you should have a good credit rating, just as it is when you are trying to get a mortgage at any time.
As with any mortgage, the key thing that you need to prove to a lender is that you have the income to cover repayments over the full period of your mortgage. The difference is that when you get a mortgage at a young age you will have the income from your employment to cover the mortgage. If you are planning to still be paying off a mortgage after retirement, this question becomes more complex.
If you are currently receiving a pension you should expect to have to show any lender bank statements to show your pension income. Alternatively, if you are not currently retired but will retire before the end of the mortgage, you’ll need to show a forecast statement of your expected income.
It may the case that you should actually benefit from a specific product – for example if you know that you will be receiving some sort of lump sum payment, you might benefit from taking out an interest-only mortgage.
With this product you only pay off the interest on the loan rather than any of the money itself. This means that at the end of the mortgage you will still have the full amount of the mortgage itself. This can provide you with time to accrue the money to pay off the lump sum at the end.
Or perhaps you are purchasing the property for someone else – for example, one of your children. In this case you might find that there are better options available than taking out a brand new mortgage – you may be better served speaking with an equity release broker about the possibility of using equity from your main property instead.
Ultimately, you need to decide whether it is really worth it for you to pay off a mortgage in its entirety. While this may be a goal that you wish to achieve it is not always the best choice for everyone.
You might find that your money is better used by saving it fully towards a pension or making different investments. You can’t simply assume that buying a property is the smartest move as it might not be right for you.
Contact us to speak to our Independent Mortgage advisor
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