Mortgage debt for the over 65's on the rise

Mortgage debt for the over 65's on the rise

Borrowing into older age is set to become increasingly common, according to a new report, with several lenders already showing a more flexible approach to people in their 60s and 70s.

The amount of mortgage debt held by over 65s is predicted to rise from £20.1 billion to £39.9 billion by 2030, a study by the International Longevity Centre-UK (ILC-UK), supported by the Building Societies Association (BSA) found.

The number of younger homeowners is falling, while the time of life by which mortgages are paid off is changing too. The report says that over 6% of those aged 35 to 64, equivalent to 1.42m people, will not have paid off their mortgage before retirement given the current term of their loan.

Separate research conducted by equity release provider More 2 Life and the Centre for Economics and Business Research (Cebr) between January and March 2017 found that the average 65-74 year old in the UK with a mortgage currently owes about £125,000, compared to an average mortgage debt of £109,000 for those aged between 55 and 64 years old.
Many lenders limit options for older borrowers, although some will allow you to borrow beyond retirement age as long as there is evidence that the mortgage will remain affordable. However, even if it is possible to demonstrate that post-retirement income will be enough to cover the mortgage, the maximum age most lenders will lend to is 70 or 75.

Others take a more flexible approach. Leek United Society, for example, has no maximum age limit, preferring instead to adopt a case by case approach. Others, such as the Family Building Society and even larger lenders like Halifax will consider applications beyond the typical 75 age limit.

Hodge Lifetime offers a special ‘55+’ residential mortgage for borrowers aged 55 or more. You can only take out the mortgage on an interest-only basis, so you must be certain you’ll be able to repay the mortgage capital at the end of the mortgage term.

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