May 10th, 2016
The UK’s largest building society will raise its maximum age limit for mortgage terms by 10 years up to age 85.
Nationwide said the increase was due to “growing demand”, a potential signal of the impact of rising house prices on buyers with the average age of buying a first home rising as a result.
The contractor friendly lender said the new age limit would apply to existing customers for all its standard mortgages.
A maximum mortgage size of £150,000 applies and must be no more than 60% of the property value.
“Access to the mainstream market has been a challenge for older customers, resulting in their needs going unfulfilled. This measure helps to address these needs in a prudent, controlled manner,” said Nationwide head of mortgages Henry Jordan.
The new limit will come into force from July, following the recent move by Halifax to increase its age limit for mortgages by 5 years to 80 from Monday.
Halifax said its decision was a response to people living and working longer.
Ian Wilson, head of Halifax Intermediaries, said: “Research shows around a fifth of the UK population works beyond the state pension age in some capacity to age 70, as demographics and working habits continue to change”.
“These changes in our lending policy will help us to meet the needs of more customers who choose to work longer”.
Simon Butler, Associate Director at Contractor Mortgages Made Easy, said: “Lenders are reacting to the changing needs of borrowers. Lending into retirement provides more opportunities for those who can show they can afford to.”
“However, affordability will be the major factor that dictates whether a borrower can take their mortgage to their older years. Past retirement age, income is likely to drop significantly and therefore the lender must deem the mortgage affordable on the lower income, usually proven via pension statements.”
“While some may not be able to prove enough retirement income to do this, contractor friendly lender such as Halifax and Clydesdale Bank may allow contractors to take their mortgage to age 70 and 75 respectively without proof of retirement income.”
“Although many will not be able to prove enough retirement income to borrow to age 85, this will likely provide a boost to borrowers on interest only mortgages who are not ready to sell and would like to switch to capital and interest repayment, as extending the term will make payments more affordable for them.”
Article By: Bradley George, Senior Mortgage Consultant at Contractor Mortgages Made Easy
Media Contact: Ratchelle Deary, Public Relations Manager
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