Being ‘old’ is not what it used to be . People are living longer – 82 for women, 79 for men – and we generally stay healthier, active, and more agile for longer.
When we do stop working, we plan on going on cruises, taking up new sports, and doing things we didn’t have time for when working. However these ambitions can be expensive and many older homeowners have their wealth tied up in assets. A great way around this equity release, which allows older borrows to release cash, tax-free from their home.
In most cases the maximum age for a mortgage is between 65-70. Because there is no upper age limit to release equity this could be a better choice instead for people in their 50s and 60s.
Mortgages for over 50s
Mortgages traditionally took borrowers up to the age of 65, but times are changing. We’re marrying later, finding it harder to get onto the housing ladder, and experiencing financial insecurity that may make us need to borrow later in life. An equity release mortgage for over 50s could be a good option for families looking to help fund university fees, help their children get on the property ladder or want to put aside some funds for retirement.
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Mortgages for over 60s
Older borrowers may be free of other commitments that can burden younger borrowers – they are further into their career and probably earn more. Their children may have left home, and many may have already come into a family inheritance. An equity release mortgage for over 60s could be a great way to boost your retirement income. While it can be more difficult as you get older to get a mortgage, there is no maximum age limit for a lifetime mortgage.
In 2015, a bank was forced to pay £500 in compensation to a married couple in their 40s, after withdrawing a mortgage approval (for an 18-year, interest-only mortgage) on the grounds that the husband would be over 65 when the term was complete. The Financial Ombudsman Service (FOS) ruled that the bank had relied on “untested assumptions, stereotypes or generalisations in respect of age.”
Mortgages for older borrowers
Lenders are likely to have their own rules on lending to over 50s, which may involve them borrowing over a shorter term and with higher monthly repayments. Some may have specific products aimed at older borrowers.
Paula Higgins, chief executive of the Homeowners Alliance, said:
“Many lenders have increased their maximum age on mortgages in recent years with building societies leading the way. Smaller societies in particular tend to take a more bespoke approach to borrowers, and are therefore more willing to consider alternative incomes post-retirement”.
Borrowing money over 50 and 60
Figures from the Council of Mortgage Lenders show that in 2030, there are expected to be around 10 million more people aged 65 and over than there are now – but only 3 million more between the ages of 20 and 64.
Figures from 2017 showed that 39% of all mortgages ended at 66 or over, almost double the number (22%) just five years earlier in 2012. However, most of those mortgages were well into their term – hence paying less interest than in the early years – and most were being paid off.
Equity release for older borrowers
Equity release is a form of remortgaging that gives older homeowners the chance to free up some of the equity in their home by taking out a tax-free cash lump sum.
- Lifetime mortgage: minimum age of 55; it is repaid once you die or enter long-term care, often through the sale of the house
- Home reversion scheme: minimum age of 65; you sell part or all of your home, but continue to live there rent free until you die or enter long-term care, after which the lender sells the property
It’s worth bearing in mind that taking money out of your property now may reduce the value of your estate and could affect your entitlement to means-tested state benefits. A qualified equity-release adviser can talk you through the impact of this before you decide to proceed.
“There are many options for older people to get access to funds, including downsizing, equity release and remortgaging. It’s important to get good financial advice with equity release and it can take some time to arrange, so you should factor this in”.
Why release equity?
Despite the Bank of England’s recent interest-rate increase, rates remain historically low. This means that freeing up cash by borrowing against the equity in your home could be, for some, a more attractive option than other forms of borrowing. Lifetime mortgages from Equity Release Council–approved lenders come with a no-negative-equity guarantee, which means that – even if house prices plummet – you will never owe more than the value of your home. Try our free equity release calculator now with no obligation and see how much tax-free cash you could release.
See how much you tax-free cash you could be eligible to unlock by using The Telegraph's free equity release calculator
By taking money out of your property now, a lifetime mortgage may reduce the value of your estate. A lifetime mortgage may also affect your entitlement to means-tested state benefits, but an adviser can walk you through the impact of this before you decide to proceed.
Only if your case completes will Responsible Life Limited charge an advice fee, currently not exceeding £1,490.
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