You may have heard about Halifax reducing the maximum working age for some mortgage applications, which could affect older borrowers. Read more…

Earlier this week, Halifax announced that it would reduce its maximum working age for a mortgage from 75 to 70 for some mortgage applications. This means that, in some cases, a mortgage would need to be paid off when a person is 70, rather than 75, giving them less time to pay off a mortgage if they borrow when they are older.

Interestingly, Halifax extended the maximum working age to 75 last summer with increased earned income opportunities.

The change to its criteria will take effect from 18 March. The new age limit applies to remortgage applications with additional borrowing and some purchase and remortgage applications due to the credit score and overall credit profile of some clients.

Regular review of lending criteria

The lender says the changes were made as part of a ‘regular review’. Starting next week, brokers selecting a term exceeding 70 years for an application will receive a message during the decision in-principle stage. The message will remind them to input anticipated retirement income or consider reducing the term as it approaches retirement age. If not, the mortgage term could be reduced.

‘Halifax appears to be recalibrating its focus on service quality and managing business volumes,’ says Shaun De Moura, MB Associates’ Senior Mortgage Adviser. ‘While Halifax still offers extended terms and later-age mortgages, these come with tightened stipulations.

‘The reversal from its recent policy to extend the age limit is noteworthy,’ adds Shaun. ‘It wouldn’t be a surprise to see another policy pivot in the near future, as flexibility for later-age mortgages is a crucial tool for advisers who help clients navigate their mortgage and household finances during unpredictable economic conditions.’

What about other lenders?

You may be wondering if other lenders will follow suit and reduce the maximum working age, but so far, this seems unlikely. Shaun adds: ‘Many people may find themselves working into older age out of necessity, but the option to make overpayments and potentially reduce the term during future remortgaging offers a reprieve and adaptability for future financial planning.’

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