To 100 and beyond… now you can get a mortgage that lasts until you die
Have you imagined reaching the age of 100? Quite possibly. But could you imagine still paying off a mortgage worth tens or hundreds of thousands as a centenarian? Possibly not, though if it crosses your mind then seriously consider whether you should, as there are risks.
As life expectancy continues to grow, the number of options available for those in their later years looking to borrow large amounts of money against their homes is also expanding. Lenders are increasingly scrapping their maximum age limits and tapping into the retirement-age mortgage market.
Traditionally, major high-street lenders would only let you hold a mortgage till you were 70 to 75 – meaning it had to be paid off by then. In effect, this meant some in their 50s couldn't get a mortgage as they may still be paying it off in their 70s, given many last 20 years or longer.
So how old can I be to hold a mortgage?
Some of the big players have upped their maximums. Halifax bumped up its upper age limit from 75 to 80 in 2016, while HSBC did the same last December. Earlier this week, Nationwide Building Society became the first high-street lender to offer new mortgages to those already retired.
Industry guru Ray Boulger, senior mortgage technical manager at John Charcol, said: "Nationwide's entry is very significant because it is the first major high-street lender to offer these mortgages, albeit initially only to its existing mortgage customers."
Yet it's the smaller building societies that are really going for it, partly due to them applying more flexibility, but also as regulations were loosened last year to allow more later-life lending. As of March, there were 16 building societies with no upper age limit – meaning you could hold a mortgage until you're well into your 100s (if you live that long, of course). One goes up to 95 and 10 go to 85.
One lender, Cumberland Building Society, advertises its later-life mortgage as being for those "55 to 105 and beyond…" (And I've got to be honest, I stole that line for the headline to this piece.)
Many of these mortgages have a fixed end date, where you need to have paid it all off by. But others work like equity release (see Martin's guide on how equity release works), as you only pay back the interest while still alive with the loan repaid from your estate when you die, or go into long-term care. These are called retirement interest-only mortgages.
Who could benefit from borrowing into their later years?
There are various groups who may benefit.
It can help some buy a new home in their 60s, 70s or beyond. Or it could allow you to stay in your family home if you've come to the end of your mortgage term and still owe the original amount you borrowed as you were only paying the interest. Many in this position have had to sell up to pay the cash back.
But what are the risks?
There are a few. Firstly, can you really afford all repayments if you're not working? And have you considered what would happen if you lost a source of income, given unexpected things can happen to any of us?
Lenders will ask these questions and assess it all, but it's vital you do that thinking first and consider all variables, as they may not get it right. Also, if you go for interest-only, how will you or your loved ones repay the debt at the end, especially if property prices fall meaning you'd get less when you or your family sold the home?
Another broker, Aaron Strutt, from Trinity Financial, says it's vital borrowers check what the charges are to move or pay off the mortgage before the full term is up, so you know how locked in you are.
Mortgages are complex enough products as it is, and this adds to the maze. If you're at all unsure of how it works, check out our Mortgages section for a whole host of helpful guides. And if you choose to apply, it's usually best to get advice from a good mortgage broker.
We're all living longer
This development isn't a complete surprise as the UK is an ageing society, with the number of over-65s estimated to rise from 12 million today to 17 million by 2034.
Over-55s own about £1 trillion in housing wealth, and banks and building societies appear to be responding to their demands.
How to get more help
As I've said, mortgages are complex and any decision you make can have a lasting effect – so don't do anything without proper research first.
Hopefully the guides below can help you too...