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Mortgages For Over 50s

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14th Aug 2020 (Last updated on 17th Nov 2020) 7 minute read

As the retirement and living age is getting older in the UK, it is possible to get a mortgage when you’re over 50. You may face stricter lending criteria, a shorter repayment period and might not have access to all mortgage deals, but it’s worth considering your options for getting a mortgage in your 50s. 

Compare My Move work with property industry experts to bring you the best advice for moving house, from the cost of buying a house to the best mortgage for you. In this guide, we will explain everything you need to know about getting a mortgage if you’re over 50, from the lending criteria to the types of mortgage. 

This article will cover the following:
  1. Can You Get A Mortgage When You're Over 50?
  2. Where Should I Start My Search?
  3. What Is The Lending Criteria For An Over 50s Mortgage?
  4. How Many Years Mortgage Can You Get At 50?
  5. What Types Of Mortgages Are Available When Over 50?
  6. How Can You Increase Your Chances Of Getting A Mortgage Over 50?
  7. Which Lenders Offer Mortgages For Over 50s?
  8. Save on Your House Move With Compare My Move

Can You Get A Mortgage When You're Over 50?

Many mortgage lenders set an upper age limit for taking out a mortgage which is typically between 65 and 70, so yes, you can still get a mortgage if you are over 50. Although most lenders will set an upper age limit for paying off a mortgage, which is usually between 70 and 85. 

The lending criteria will be more strict, especially if you’re retired as the lender will be cautious that you won’t be earning income anymore. However, if you can provide evidence of ongoing income and a good amount of savings, this will improve your chance of getting accepted. 

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Where Should I Start My Search?

Applying for a mortgage when you are over 50 might affect the deals that are available to you. By using a mortgage broker, they will have access to deals from smaller banks and building societies that you might not be able to find. They will offer their expert opinion to ensure you get the best deal for your over 55 mortgage. 

Hiring a conveyancing solicitor to help you through the legal side of your house move will ensure the process is smooth. Don’t forget to compare conveyancing quotes to make sure you get the best deal for your conveyancing process. 

What Is The Lending Criteria For An Over 50s Mortgage?

Like any mortgage, your mortgage lender will accept your application if they are confident that you can pay your monthly repayments. Although as an older buyer, you might find the lending criteria difficult to meet, especially if you are retired. You should ensure you have evidence of the following before you apply for a mortgage:

Source of Income - Just like a traditional mortgage, you will need to show evidence that you have enough money coming in to pay back your monthly repayments. They will also check how reliable your source of income is. If you’re retired, lenders will ask for evidence of an ongoing income such as a pension or evidence of savings. 

A Good Credit Score - As you’re an older buyer, you should have a good credit score. If not, you must ensure you can do everything to present a good credit score to the mortgage lender to improve your chances of getting accepted. Check out what credit score you need for a mortgage in our detailed guide. 

How Many Years Mortgage Can You Get At 50?

Getting a mortgage if you are over 50 will typically mean you will have a shorter repayment period. Unlike the usual repayment period of 25 years, getting a mortgage at an older age will mean you’ll have around 15 years to pay off your mortgage, depending on age. Most lenders have an age limit of 70-85 for when you should pay back your mortgage.

Lenders will look at how much of your mortgage will be paid back during your retirement years. If you are 10 years away from retiring with a 25-year term mortgage, lenders will base their affordability assessment on your retirement income. However, if you have a shorter mortgage repayment period then lenders will look at your current income. 

If you’re taking out a mortgage at 50, then you will most likely have the typical repayment period of around 25 years. It’s worth noting that many lenders don’t want to borrow to people who are much older than the retirement age, which is typically 65 in the UK, as income does become unstable. 

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What Types Of Mortgages Are Available When Over 50?

As many people are living longer in the UK, there are many options for over 50 mortgages. With all mortgages, if you can prove to the lender you can pay back your loan, then they will accept your mortgage application

Standard Mortgage -  

Standard Mortgages are available to those over 50 with the choice of a Fixed or Variable rate mortgages. 

A Fixed-rate Mortgage is available to over 50s, with age limits on when you can take out the mortgage varying form 65-80. With a Fixed-rate Mortgage, the interest rate you pay per month is guaranteed to stay the same for a fixed amount of time, usually 2-5 years. 

A Variable-Rate Mortgage will adjust each month in response to the market. This means you could be paying more some months, but when the base rate is low, you will benefit. Now could be an ideal time to look at variable-rate mortgages as the base rate is at its lowest due to the Coronavirus Pandemic. 

Lifetime Mortgage - 

Another available mortgage option for over 50s is the Lifetime Mortgage. A Lifetime Mortgage can be taken out once you own your home outright. If you have paid off your current mortgage, a Lifetime Mortgage will allow you to release some equity in your house without selling it. 

You must be over 55 and the loan you take out does not have to be paid back until you go into long-term care or pass away. A Lifetime Mortgage might affect any inheritance you leave as your house will be sold to pay for the interest from the mortgage.

Retirement Interest Only (RIO) - 

A Retirement Interest Only (RIO) Mortgage is ideal for those who want to remortgage and stay in their house for a bit longer. By remortgaging, you’ll be able to repay any mortgage debts from your last mortgage. 

An RIO Mortgage works by borrowing a percentage of the value of your house as a cash lump sum. You’ll be charged only on the interest of the loan. The loan will be repaid once you have either sold your house, go into a care home or pass away. 

To apply for an RIO Mortgage, you must be over 55 and have a reliable and regular income that will prove you can pay back the monthly interest repayments only. Interest rates are usually higher than traditional mortgages, ranging from 2.74% to 4.55%. 

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How Can You Increase Your Chances Of Getting A Mortgage Over 50?

If you can prove you have a reliable regular income and you can afford to pay back your mortgage loan, then your lender will accept you for a mortgage. There are certain things that will also work in your favour if you’re worried about not being accepted:

You Own Your Home Outright - If you own your current home outright, this will give you access to some equity tied up in your house, allowing you to use it as an up-front payment on your new home. Lenders will view this as a positive as you can provide a large deposit up-front.  

You Have Savings - If you have a decent amount of savings as well as a regular pension income or income from your job, you will stand a better chance of getting accepted for a mortgage. A lender will view your savings as a backup plan to repay your mortgage if anything happened with your income.

Which Lenders Offer Mortgages For Over 50s?

There are currently 18 providers offering an RIO mortgage, with the only high street option being Nationwide. Building societies offering an RIO mortgage include Bath Building Society, Tipton & Coseley Building Society and Hodge Lifetime. 

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Disclaimer

All data, research, facts and figures have been taken from reputable sources and government data that was accurate at the time of writing. Mortgage criteria, interest rates and policies change regularly and vary depending on the lender and type of mortgage you have. You should speak directly to your mortgage lender for clarification. It should be noted that your home may be repossessed if you cannot keep up with your mortgage payments.
Martha Lott

Written by Martha Lott

Having written for Huffington Post and Film Criticism Journal, Martha now regularly researches and writes advice articles for everything moving house related.