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What is the maximum age at end of the term of a residential mortgage?
Lenders all have their own rules about what age they allow a mortgage to run until.
The end of your mortgage term is when you make your final payment to the lender paying off the last of the balance, or if on interest only, the point where the lender wants their money back.
A common age to run until on residential mortgages is until the applicant’s 70th birthday. Many lenders use 70 as the age at which a mortgage needs to be finished.
There are however residential mortgage lenders that can go to an older age.
For instance, it is not uncommon for lenders to insist that the term needs to be finished by age 75, based on employment income.
The lender will likely need to sense check that your occupation would allow you to work until that age.
There are even residential mortgage lenders that can consider a term ending at 79 based on your employed income.
Like with the last example, it would need to be plausible that the occupation could be carried out at 79. For instance, if you were a scaffolder, the lender may be concerned.
If you are not looking to use earned income for the mortgage application, some lenders can go to an even greater age, such as 85 or 90.
In this situation, lenders would need to be comfortable that you will be able to continue to earn income at a level that pays for a mortgage, throughout your retirement.
This means that the lender will need to underwrite your pension income to ensure that it is sufficient to pay your mortgage throughout your retirement.
You should look for a mortgage adviser that can give you independent advice on what may be the maximum age in which you can have your term until.
They will assess your individual situation and advise you based on your circumstances.
Most mortgage advisers will be willing to offer you a free consultation before any chargeable work is undertaken.
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What is the maximum age at the end of the term of a buy to let mortgage?
Buy to let mortgage lenders can be more flexible on the maximum age that they lend until.
The reason is, an applicant’s retirement age does not stop the property from generating a rental income.
It is also not uncommon for an applicant to be buying a buy to let property to boost their income in retirement.
Having said that, lenders do still have their own criteria around the maximum age that they lend until.
Buy to let lenders will allow the term to run until the applicant is 80 or 85 years old. Some lenders need it paid back a bit sooner, such as by age 75.
There are even buy to let lenders that have no maximum age for when the term needs to be paid back by.
This means that effectively, with some lenders, a 70-year old could take a 30-year mortgage, taking them to age 100.
Lenders frequently change their criteria including maximum age, so talk to a mortgage adviser to find out what age your buy to let mortgage can run until based on your own circumstances.
What happens when you come to the end of your mortgage term?
When you come to the end of your mortgage term, you will either be making your final repayment on your capital and interest mortgage, or clearing your interest only mortgage.
If you have an interest only mortgage, you will have disclosed your repayment method to the lender.
This may have been sale of the property to downsize, or perhaps an investment linked strategy such a pension lump sum.
Your lender will write to you to inform you that your term is ending so you can now pay them back.
If you feel that you’re not in a position to repay the loan by the agreed date, you should call your lender to discuss the situation so you can work together to resolve things.
Your lender may agree to extend the term if needed, however this is not guaranteed, and many lenders do not offer this.
Refinancing the mortgage may be an option depending on your situation.
If you want to explore this route, you should talk to an experienced mortgage adviser about what options are available to you.
Most mortgage advisers will be willing to offer you a free consultation before any chargeable work is undertaken.
What is the maximum age at the end of the term for a commercial mortgage?
Commercial mortgage lenders can also be flexible on the age at the end of the term.
However, if you are running the business that is operating from within the building with the commercial mortgage, the lender will need to be comfortable that you can continue to do so throughout the entire term.
If you believe that you will need to retire, with no solid plans about how the business will run in your absence, the lender may be uncomfortable agreeing the mortgage to run into your retirement.
If you plan to rent out the commercial building to another business, this could alleviate that concern.
A commercial mortgage broker will be able to gain a full understanding of your situation, and the commercial property that you wish to finance. With this, they will be able to work out what your maximum term will be based on your own circumstances.
Your commercial mortgage adviser will likely be a member of the National Association of Commercial Finance Brokers.
What is the maximum age for a bridging loan?
Bridging loans can also be taken at a greater age, for example, into somebody’s 80s. It may even be possible to go to an older age than this, if the lender is comfortable.
The interest on bridging loans is usually retained, meaning that it is paid back when the property sells.
As a result, the lender is not dependent on somebody’s income to make the monthly payments.
However, bridging loans are expensive and can be risky. Due to this, it is very important to make sure that taking the bridging finance is the right thing to do.
It is essential that all borrowers are able to fully understand the products which they are taking.
Applicants should also consider any other alternative routes before signing up to bridging finance.
Professional advice should always be taken.
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Conclusion
Lenders all have their own criteria on what age they will allow a mortgage term to run until.
For residential mortgages, some can run until an applicant’s 80th birthday based on just the earned income alone.
This is on the assumption that they will not be retiring until this age.
Many other lenders can go to a greater age if they are using the retirement income for affordability.
Buy to let mortgages, commercial mortgages and bridging loans can be even more flexible depending on the lender and the situation.
To find out what age your mortgage can run based on your own circumstances, you should look for a qualified mortgage adviser.
If you would like I NEED ADVICE to match you with an experienced broker that can explain your options, please complete the contact form.
The information on this page is not tailored to any individual readers and should not be considered financial advice under any circumstances.
If you are seeking advice about a mortgage, you should consult a qualified professional.
