Mortgage Options Homeowners Over The Age of 50

Later Life Borrowing can be a strategic decision for those over 50, offering opportunities for financial flexibility and achieving personal goals. This introduction delves into the uses of lending, eligibility requirements, and key product features relevant to this age group.

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Questions We Are Asked

When Homeowners over the age of 50 contact us about Later Life Borrowing, they want to know: what types of mortgage they are eligible for, what they can use the money for and what the product features are. Here we start to answer all these questions.

Eligibility For Borrowing

Although not all Later Life Borrowing products need income to be established, reputable Advisors will complete an Affordability calculation with every client enquiry. This is to ensure eligibility for affordability based products as well as to calculate if interest or capital payments are advisable for non-affordability based products.

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Eligibility criteria for borrowers over 50 include:

  • Income and Employment: Steady income from employment, pensions, or other sources
  • Credit History: A solid credit history enhances loan approval chances.
  • Property Equity: For equity release products, the amount of equity in your home is crucial.
  • Age and Health: Some products, like lifetime mortgages, consider age and health.

Uses of Borrowing for Over 50s

Below are some of the reasons that our clients have raised funds from their home.

Many homeowners over the age of 50 took out an Interest Only Residential Mortgage around 25 years ago. Unless a repayment tool (Savings, Investment, ISA etc) was put in place, the homeowner still owes the initial amount borrowed at the end of the mortgage term.

When the lender asks for their mortgage to be repaid, thousands of people are unable to pay. If this is you, then a form of Later Life Lending to repay the mortgage and remain in your home may be an option for you.

This one surprises many people. Using Equity Release to purchase a new home is something that many people do not realise you are able to do. If you need to move home and want to raise funds to purchase a bigger home, or if the new property is in a more expensive area then consider Later Life Lending.Also, if you want to raise money from your property, use a loan to help you purchase the property and part of the cash raised from selling your old property can be kept.

Using the money tied up in your property to improve your enjoyment of your home seems a logical choice.

It may be that you want to add extra space to your home, carry out repairs, make your home more accessable. You may even want to landscape your garden, fit new windows or create a garden room.

This reason has grown in popularity over the last five years. Many of our clients have used the value of their property to raise funds to gift to family. This is often to help children fund a new property purchase. We are also seeing more use of gifting of funds raised from the home as part of estate planning.

Some of our clients use part of the funds they raise for holidays. This may be the holiday of a lifetime to celebrate a special birthday or event such as retirement. Some of our clients have taken funds that they will release part of each year to pay for their annual holiday. By doing it this way, they only pay interest on the funds that they draw.

This has been a popular use of the funds released from property. Many clients have funded the purchase of a new or second hand car. The increased popularity of electric cars also mean that clients are using the funds to purchase a cheaper and more environmentally friendly vehicle.

This is a difficult one. Many homeowners over the age of 50 have found in recent years that their income does not strecth as far as it used to. Taking equity from a property may be an option to boost income, however this does need careful consideration and advice from a qualified professional.

Product Features of Later Life Borrowing

For individuals over 50, understanding these aspects of lending can ensure they choose the right financial products to meet their needs. It is important to consult with a financial advisor. Alternatively, use loan eligibility checkers to gauge personal loan options and tailor financial decisions to individual circumstances.

Key features of loan products for those over 50 include:

Secured loans may offer lower interest rates but require collateral, such as property.

Fixed-rate loans offer stability in repayments, while variable rates may change with market conditions.

Terms can vary, with some lenders offering longer terms for older borrowers. Other products such as Equity Release have no defined term and only end on the death or entry into care of the property owner.

Flexible repayment options can be beneficial, including the possibility of interest-only payments or balloon payments at the end of the term.

Understanding any penalties for early loan repayment is essential.

The Next Page is ‘Consumer Protection: Navigating Your Options’.

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