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How to get a mortgage if you’re over 40 in York

Specialist Mortgage Advice in York

Keep in mind that the information below is intended solely for reference purposes and should not be taken as any kind of personal, financial or mortgage advice in York.

Can I get a mortgage at 40?

The most simple and straightforward answer to this question is yes, you may be able to get a mortgage if you are aged 40 years old or over. This does, however, come down to your situation.

In an old survey carried out on mortgage brokers by the Nottingham Building Society, a vast range of individuals surveyed highlighted that they have noticed a rise in mortgage applications being declined for those who were within this age range.

Through speaking directly to these customers that were aged between 45 & 54 and had declined in the time this was analysed, studies found that it was the age that was the ruling factor for this.

Below we will look into the reason why these home buyers are going through this as well as the best steps you potentially could take if you are interested in taking out a mortgage over the age of 40.

Why are over 40s having mortgage applications denied?

In order to really understand the situation these mortgage applicants are in, it’s key to take a look back in the past, long before computerised credit scoring was introduced and increased industry regulation.

Back then, if you were looking at getting a mortgage you would approach your local building society. It’s very likely that you would have been speaking to the building society branch manager or one of their in-house mortgage advisors in York.

They will look through all of the personal information that you provided in order to see how well you manage your finances in your current account so they can determine if your mortgage application should be approved or not.

In the fortunate case where you were to be approved, you will be able to have an insight on how much earners in a position like yours, were able to borrow for a mortgage. This will be presented to you in the form of a gross annual salary.

For example, if an applicant was earning a figure of approximately £20,000 per annum and the mortgage lender’s income multiple was 3.5x, this would result in you being able to get a mortgage of around £70,000.

An element that this income multiplier doesn’t include is the applicant’s age. As a result of this, age wasn’t factored in so it doesn’t matter if you were 30,40 or 50, usually, you would be able to borrow the same amount on a mortgage.

That sounds quite fair actually, doesn’t it? No signs of ageism.

On the surface, this might seem alright, however, for those who are planning to retire at 65 with one having a term of upwards of 35 years, whereas the other may only have a 15-year term, this would mean they are paying higher monthly payments.

Let’s revisit the previous example of a £70,000 (capital and interest) mortgage, along with a national rate interest of 5%, below gives you an idea of what it looks like:

With this example, we have two earners that are pretty much identical, both with the same amount of mortgage debt, however, applicant two has a lot higher monthly payments.

In the event that the national interest rates drastically rose, this would result in a much higher risk of arrears happening for the applicant who has higher monthly payments. It’s all about minimising risk.

These days, modern mortgage calculators normally factor in the maximum length you could take a mortgage for (or in simple terms, your age), along with your income and your expenditure.

Our Thoughts

Previously, the BBC got contacted by our very own “Moneyman” Malcolm Davidson for this thought on the Nottingham Building Society study. His view was not so much that older customers are being declined, however, they cannot borrow as much as they perhaps hoped they’d be able to.

The irony within this situation is that we are in a frequent cycle of being told by our own government that it’s important we work until a later age, as a means to raise the retirement age for us to qualify for our state pension.

it’s unfortunate that the high street lenders don’t usually take this into account when it comes to accepting customers with getting their mortgages. Check out a more in-depth insight below.

Why It’s Hard to Get a Mortgage Over 40 Years Old

First of all, there are many industries in the country that are manual labour-focused. It’s very unlikely that anyone going into their seventies will carry on working.

On top of this, mortgage lenders are usually closely regulated in terms of repossessions and arrears cases, because these look bad and they want to avoid them if possible. It’s quite costly to take a property into possession and can bring bad press for these mortgage lenders.

Pursuing the topic of mortgages for older mortgage applicants, they obviously don’t want to push a pensioner out of their own home due to not being able to cover their mortgage anymore.

Luckily, lots of mortgage lenders out there have looked at the idea of granting mortgages to applicants above the usual retirement age as a way to afford a mortgage in retirement.

As a way to do this, you would normally give your mortgage lender a letter from your pension provider that would project what your future income is going to be. The issue with this is that even with this, your income will normally be lower at retirement than it used to be.

When it comes to affording a mortgage, a mortgage lender would need you to prove that you are able to do, even with reduced income at retirement and beyond.

You may feel this works in theory, but this doesn’t always work well in practice unless you are thinking of taking out a smaller mortgage. At that point, you probably don’t need to take out a mortgage beyond that point.

Back in 2011, they dropped the default retirement age and made it so that your employer can’t force you to retire if you do not wish to do this.

Due to this, there will be a number of mortgage lenders who use the state retirement age as the general guide for working out when the mortgage should be repaid. On the other hand, it has started to become a lot more common for customers to be able to self-declare their retirement age.

Mortgage lenders will have a more logical approach to this. For example, if you had a more hands-on job like a firefighter and you wanted to declare 72 as your retirement age, it’s unlikely for this to be seen as realistic.

With the Help of a Mortgage Broker

An experience that one of our Mortgage Advisors in York went through was with a mortgage lender who agreed to make a 9-year mortgage for a 66 year old accountant who was looking to retire at the age of 75.

This situation is quite niche and won’t apply to the majority of people meaning it is not a guarantee you could go for this option, however, it does highlight how flexible some mortgage lenders can be flexible. To increase your chances, it’s good to demonstrate how you are to afford a mortgage when you retire.

There are consumer protections and regulations that are there to protect consumers and encourage careful lending.

In your later years, there is a range of routes you could go down to protect you and your home like equity release in York through taking out a lifetime mortgage, or alternatively look at retirement interest only or possibly a term interest only.

If you speak to a trusted and qualified later life mortgage advisor in York can look at your situation. Furthermore, if you are at the qualifying age for these types of mortgages and would like to start looking into the different options further, they can kickstart a conversation with you and your family regarding this topic.

Whether you are a first time buyer in York or are thinking of moving home in York, feel free to get in touch or book your free mortgage appointment. Our mortgage advice team are happy to take our call.

To understand the features and risks of equity release in York, lifetime mortgages and later life lending, ask for a personalised illustration. Our typical advice fee is up to £1,495 only payable on completion.

A lifetime mortgage in York may impact the value of your estate and it could affect your entitlement to current and future means tested benefits. The loan plus accrued interest will repayable upon death or moving into long term care.

Date Last Edited: December 19, 2023

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