Can older mortgage prisoners remortgage?
Of the estimated 200,000 UK mortgage prisoners trapped in high-interest rate mortgages, a third should be able to switch to lower rates, says the Financial Conduct Authority (FCA).
But what if you’re 50 or even 90 years old? Are you going to pass lenders’ affordability criteria to qualify to remortgage?
Mortgages in retirement are more common
It used to be a tricky thing to get a mortgage the older you got. Even three years ago (2019 – 2022), Retirement Mortgage Service research found that only 438 of a mere 2,540 older mortgage applicants were able to refinance onto another mortgage, a retirement interest-only mortgage or a lifetime mortgage.
Fast forward to April – June 2023, and more than 50,000 borrowers aged 70 and above successfully arranged mortgages, according to George Nixon’s article in The Sunday Times, Is a mortgage in retirement really such a bad thing?
Our own LiveMore research in 2022, found that only four per cent of over-50s believed they could get a mortgage in retirement, compared to an even tinier two percent of over-80s.
Why remortgage?
Remortgaging can be one of the cheapest ways to reduce your monthly outgoings. And with a record 8.18 per cent average Standard Variable Rate (SVR) at the start of October 2023, you really want to remortgage if you can – even though fixed rates are much higher than this time last year.
Many older people stay on their lender’s SVR because they think remortgaging isn’t an option for them.
Not so. Some lenders in recent years have extended the maximum age. For example, our oldest customer was 92 when she took out her mortgage. But then, for us it’s less about age and more about the bigger, more holistic picture.
Can older mortgage prisoners meet affordability criteria to remortgage?
Following the scrapping of the affordability test in August 2022, when borrowers had to prove they could cope with a future rise in interest rates, it is now up to lenders to set their own affordability criteria.
So, basically, you want to switch to a new lender who is happy to carry out a modified affordability assessment.
For mortgages after retirement, lenders will want to check you have sufficient income to cover monthly repayments, such as pension contributions and – in the case of LiveMore – other assets such as investments and additional property in the UK or abroad will also be considered.
Basic potential lending criteria may require:
- A minimum of five years remaining on your mortgage
- A remaining mortgage sum of at least £50,000
- That you are up to date with your mortgage payments, and have been for at least 12 months
- That you do not want to borrow more
- Minimum property value of at least £100,000
- A maximum LTV (loan to value) typically of no more than 75%
- You have a clear repayment plan if you are on, and want to remain on, an interest-only mortgage
Fed up being a mortgage prisoner?
Book a call with LiveMore Advice to see if any of our over 50 mortgages could be suitable.
