What Are Older Lenders?
The term ‘older borrower’ most often describes a person who is over the age of sixty-five and attempting to secure a mortgage or have their mortgage application approved by a lender. That said, potential borrowers as young as fifty years old have been surprised to discover their age has affected their chances of securing a mortgage.
Why Are Mortgage Lenders Reluctant to Approve Older Borrowers?
Mortgage lenders have traditionally always been reluctant to lend to ‘older borrowers’. The fact is, a lender’s business is to be cautious and to weigh up every potential risk before approving an individual’s application. If mortgage lenders did not do this they would be gamblers and not professionals and we would not in turn trust and so turn to them when looking for a mortgage deal.
The problem then is that the further from an ‘ideal applicant’ a person is in terms of their age the more risks or higher the risk is that a lender must take on in order approve that person for a mortgage.
Then, and suffice to say, a lender neither wants to offer a mortgage to somebody who is at an increased risk of becoming unable to make repayments, and lenders regard older people as carrying an increased risk because they may be (due to their age) less able to earn money or earn for as many years as a younger person, or even live as long. Further, an older person statistically carries more risk of becoming ill or more affected by illness which could further cause them to become unable to repay their mortgage, or continue to make repayments or return to work or their home at all.
Finally, even if a lender calculates their risk and would consider approving an ‘older lender’, often the risk (however small) of having to take an older person’s or pensioners home from them is enough to make a lender refuse to accept an application by a person who is describable as an ‘older lender’, never mind approve that application. The idea of the storm the media could kick up over a lender pulling a pensioner’s home out from under them is enough to make many lenders steer well clear of an older borrower, even if the risk itself does not.
How To Maximise Your Chances Of Having A Mortgage Application Approved As An Older Borrower
How then can a person whose age places them in the ‘older borrower’ category hope to secure a mortgage? Well, by following a few tips, an older borrower can at least improve their chances:
- Mortgage Providers love things to be clear, clean cut and organised, so making sure your application is exactly that can in itself help a lender to make a fairer assessment as to whether to lend to you.
- If you are retired, take extra care to state your income – and all of it – clearly and plainly. This includes any pensions, investments and insurance policies.
- Consider securing a guarantor before attempting to secure a mortgage. Nobody, whether because they are young, self employed or older likes the idea of asking somebody to be their guarantor, but if the idea is enough to prevent you from approaching a potential guarantor you need to ask yourself: why, if I am not willing to risk securing a guarantor, would a lender risk approving my mortgage application?
- Search for an appropriate mortgage provider. Many lenders have an age limit as to who they will lend to. Check this when approaching a lender first off to avoid wasting any time. Further, be aware that even lenders who do not state that they have a ‘maximum age’ for their applicants might still have rules as to how old an applicant can be when they finish repaying their mortgage.
- If you are still struggling to secure a mortgage or even raise the amount desired by lenders due to your age or circumstance, consider releasing equity on any existing property you own. This tip features low on our ‘tip list’ because whilst releasing equity can make securing a mortgage possible, it can also leave a person or their family and loved ones worse off if done without sufficient thought and often expert guidance.
For more information and / or for expert advice as to your specific situation and options as a potential borrower of any age, contact our mortgage brokers today.