First time buyers aren’t the only group to struggle to find a mortgage – think mature first time buyers or those renegotiating a mortgage to improve a current deal or moving house, perhaps to downsize, and the estimated 1.9 million people with an interest only mortgage due for final payment.
It’s an ‘age old’ question and one which can throw borrowers into a panic. Simply being able to afford mortgage payments is no longer sufficient in itself to get or renegotiate a mortgage.
Mortgage lenders cannot technically discriminate on the grounds of a borrower’s age but they must ensure that you can pay the debt off in full. A 35 year old in full time work has a better chance of switching to an affordable repayment mortgage than a 70 year old, whose repayments would be too high to be affordable.
The National Consumer Credit Protection Act of 2010 has actually complicated matters further for some people. It was created to make lenders responsible for verifying a customer’s financial situation and seeing if a customer could pay without substantial hardship.
There are some mortgage lenders who will consider lending to older borrowers. Some have an upper age limit of 70 years old and a few have no formal upper age limit for borrowers. The mortgage term available to older borrowers will usually depend on their age at application.
In some cases borrowers can be turned down if one partner is viewed as too old or both candidates are not paying into a pension fund.
In 2016, the Co-operative Bank paid out £2,000 in compensation after it was found to be guilty of discrimination by the Financial Ombudsman Service when a 69 year old borrower wanted to extend his mortgage by five years. As a consequence, the bank reviewed some of its policies to make sure no further discrimination took place.
The customers most at risk of being declined are:
- Older borrowers (anyone aged between 45-50 and over)
- Pregnant women
- Applicants with large personal debt and/or low credit rating
If you fall into any of these categories, it would pay to do some extra research and make sure your mortgage application is on point before submitting your application to a lender. If there is any doubt, you are at more risk of receiving a refusal on your application and a resultant poor credit rating on your credit file.