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 Age-old solutions from Complete guide to Homebuying October 2002 As lifestyles change more and more people over 50 are looking for new mortgages. Complete guide to Homebuying has some tops for older borrowers 1. Most mortgage are calculated over 25-year terms. So if you are looking for a new home loan the lender will want to see signs that you will have an income for the next quarter of a century. However, getting a home loan shouldn't be a problem. Robert Clifford, managing director of broker Mortgageforce, says: "We find it as easy to accommodate people in the upper age bracket as we do first-time buyers." 2. If you are above over 40 years of age the lender or broker may want to know when you intend to retire. If you don't intend to work for another 25 years, they will be interested in what income you will have after you have left full-time employment. 3. The income you may have after retirement is likely to be made up of your state pension, any occupational or personal pension and pay outs from any other investments. You may also intend to work part-time. Most lenders take all these income streams into account, but some may not take into account your state pension or may only include some of it. 4. Some lenders have a maximum age for borrowing. Where a maximum age is stated it is usually the age by which the mortgage must be paid off, rather than the age by which you must apply. So if you are 51 and the lender states a maximum age of 65 you won't be able to apply for a 25-year mortgage. 5. Some lenders don't have a stated maximum age for borrowers, among them Halifax, Britannic Money and Northern Rock. As long as you have sufficient income to cover the repayments throughout the term of the loan the lender will consider your application. Others have a high maximum age - Abbey National, for example, sets its maximum at 85 years - but many insist that the mortgage is paid off before retirement age. 6. If your preferred lender has a low maximum age or you are not going to earn much in retirement you could opt for a reduced mortgage term so the loan is paid off before you finish work. Most lenders allow you to choose the term of your mortgage at the outset so you can adapt the loan to fit your needs. 7. Reducing the term of your mortgage can have disadvantages. With a repayment mortgage your monthly payments will be increased; with an interest-only loan your monthly payments will be unaffected but you will have fewer years for your investment vehicle to grow to the required level. 8. The amount you can borrow may be restricted if you are approaching retirement age. According to Rob Clifford: "Often lenders are very comfortable with loans up to 85 per cent LTV but less comfortable above that." If you haven't got a large deposit, though, you may find you are unable to get a loan. 9. Some lenders offer interest-only age-related mortgages specially designed for older borrowers who want to buy a new home. As with an ordinary interest-only mortgage you only pay off the interest on the loan each month. However, you don't need to have an investment vehicle in place to cover the debt. The capital will be paid on the sale of the house or by a life insurance policy. Some lenders insist that a life policy is in place and assigned to them. 10. A few lenders still insist on assigned life policies with a conventional mortgage too. Life insurance gets more expensive as you get older and for some borrowers the costs will make taking out the new mortgage too expensive. Before you commit to a new loan, it's worth finding out if this cover is compulsory. 11. If however you don't have any life cover and you are living with a spouse or partner you should consider what their position will be should you die. Will they be able to meet the mortgage repayments by themselves or do you need some life cover in place to provide for them. 12. Borrowers who have already retired and who intend to remortgage to release the equity in their property could consider a specially-designed equity release mortgage. Broadly speaking there are two different types of plan - reversion plans where you effectively sell a share of your home to the lender and interest-only loans. Both give you a lump sum payment in return for a share in the value of your home. To take an interest-only loan you need to show you have an income that will cover the interest payments. 13. The maximum you can borrow through one of these plans is usually around 30 per cent LTV, although Halifax offers some borrowers up to 75 per cent. All equity release schemes have minimum age requirements and these are usually 70 to 80 years. The amount you can borrow depends on your age with the biggest loans available to the oldest borrowers. 14. Before you take out an equity release scheme you should speak to an IFA and take legal advice. 15. Buy to let loans are also available to older borrowers. Several lenders offer loans to borrowers up to the age of 75, while many others are open to negotiation. 
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