New Home Owners And Snagging Forum
Home Owners => Mortgages and Insurance => Topic started by: Philofacts on May 31, 2011, 07:36:19 am
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After the increasingly stringent requirements set by lenders, borrowers in their 40's may now soon find out that they are too old the loan they are looking for. Anyone looking for the traditional 25-year term could be considered too old if this takes them past the state retirement age. This would affect anyone in their late 40's moving up the housing ladder and therefore increasing their loan.
If you stop working before the loan is repaid the banks are saying they cannot justify offering you a mortgage. Leeds Building Society is the exception offering loans that can run until your 85th birthday. Trading down is not often accepted as a means of repaying a large loan.
However, many lenders are concerned about breaching age discrimination rules and flexible retirement rules so in most cases lenders will try to help older borrowers. You may need to provide additional information such as pension projections and statements to demonstrate the loan will be affordable even after you stop working. It may also be worth considering taking out a shorter term, say 20 years or even shorter as this will increase the chances of your loan being approved.
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It seems to me that this will ultimately ruin the housing market. The markets rely on people making moves, especially as they get older and increase their wealth. Many people don't have the ability to advance until they reach their late 40's or early 50's. I am not sure how companies can prevent someone from moving into a better home. Rarely can a young couple move into a house that will be their home forever. Needs and wants change, and I have a hard time believing that mortgage companies could discriminate on age. Interesting!
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The older you actually are the more equity you have in your property, the more credit history you have and the easier it should be to get a loan.
The topic centred around people buying their first home later in life or having 95% loans that they cannot afford to repay before they retire.
Now we have the ever changing retirement age, maybe those in their forties my never be able to retire at all!