Should maximum mortgage age limits be removed?

After two mortgage lenders have announced they’re increasing their maximum lending age, is it time for lenders to consider removing maximum age limits completely?

Halifax and Nationwide have revealed they’re increasing their maximum age limit, with Halifax increasing the mortgage age to 80 and Nationwide 85.

This increase is great news for older lenders who’ve struggled with affordability criteria, who have had to take shorter lending terms as a result of their age.

Henry Jordan, Nationwide’s head of mortgages said: “We are taking a series of steps to meet a growing demand from customers to be able to borrow in later life, these customers are often asset rich, with significant equity in their home, and they wish to have the flexibility to borrow against it.”

According to Post Office Mortgages as a result of the booming house prices the age of the average first-time buyer has increased to thirty-five.

When people do eventually go onto the property ladder they opt for the thirty-five year mortgage terms rather than twenty-five as it reduces monthly cost, allowing them to pass the affordability tests, meaning that people are getting older before they clear their mortgage.

Maximum lending age on mortgages is the oldest you can be when the mortgage can be cleared, by increasing the age limit Nationwide and Halifax are providing older borrowers with more options.

Earlier this year in January Dudley Building Society announced they had removed the maximum age restriction across their product ranges.

Head of credit Jonathan Moore said: “We consider all borrowers to be equally worthy of consideration, and by making our entire range available, we will demonstrate that we do not discriminate by age.”

Halifax have addressed concerns that older people with smaller pension savings would struggle to make repayments, by adding that borrowers whose term would extend past their 70th birthday will have to provide evidence they have sufficient funds to provide an income that will cover mortgage payments.

Head of money at Matt Sanders said: “Although the borrower may sell the property long before the 35-year term, the lower monthly costs could make the difference between qualifying for the mortgage in the first place and being declined.”

“This is a positive move but mainstream lenders need to go further. If a borrower can show that they can afford mortgage repayments, their age should be immaterial.”

Posted on May 13th, 2016 in Property

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