Many people think they may be ‘too old’ to borrow again after splitting up from a long-term partner, but this is not necessarily true. It’s all about getting access to good advice so that you can explore a range of options.
Divorce rates are down in England and Wales. There was a 28 per cent fall in the number of divorces between 2005 and 2015.
Yet older people are bucking the trend. In the same period, the number of men divorcing aged 65 and over went up by 23 per cent according to the Office for National Statistics. The number of women of the same age range divorcing went up by 38 per cent.
More than 40 per cent of couples aged 60 and over divorced in 2010. The Office for National Statistics reported in 2017 that older people in England and Wales were getting married and divorced in greater numbers.
Further data from the Office for National Statistics showed that there were 103,592 divorces granted in England and Wales in 2020 – a 4.5 per cent decrease compared with 2019. However, the over 60s age group getting divorced has doubled since 1993.
Happiness in later life
There are several reasons why this may be occurring. Firstly, people are living longer and want to be happy in their later years. Secondly, they may be working longer and can therefore afford to separate. It’s also no longer considered taboo to get divorced and start again in later life.
That said, starting again on the property ladder after a long marriage can be very daunting. Dividing assets and pensions can be challenging and stressful.
At MB Associates, we talk to many clients in this situation who think they are too old to get a mortgage. Many clients over the age of 50 think it won’t be possible. This is a common misconception and one we frequently hear.
Options for older borrowers
Fortunately, there are mortgage options for older borrowers. Our lives have become more transient, and lenders have taken this on board. They are much more flexible than they used to be and generally accept that lifestyles have changed.
‘When I started out in this business, mortgage terms were usually 25 years and you always finished a mortgage by the time you were 65,’ says MB Associates’ Managing Director Monica Bradley. ‘Now there are many opportunities for people to borrow in later life.’
There are more lending options than before for those over 50. ‘Lenders have made great strides in accommodating older borrowers,’ says MB Associates’ Sales Manager, Phil Leivesley. ‘Many lenders are happy to accept that you might now retire later and, providing it is feasible that you could maintain your specific job role, they will be happy to lend until age 70 and maybe even older.’
Getting a mortgage in your 50s
If you are 50 you could get a 20 or 25-year mortgage and will most likely still have a reasonable amount of choice.
Getting a mortgage in your 60s
It is possible. However, you will need to prove that your pension and investment income can meet your mortgage payments.
The same applies if you are going to be retired during the term of the mortgage. A lender will want to know that you can continue to meet your monthly payments after you retire.
Is there an age limit on how old you can borrow?
There is no official maximum age limit on applying for a mortgage, but most lenders impose their own limits. They normally impose a maximum age of 65 to 80. The mortgage term would normally need to end between the ages of 70 and 85.
Less time to pay off your mortgage
Depending on your age, the mortgage term will usually need to be shorter than if you were younger. This means the monthly payments will be higher.
Buying a property after a separation
If you are splitting up from a long-term partner and don’t want to end up living in a flat after years of being in a house, equity release may be an option for you. Many people may not know that it is possible to take out an equity release scheme on a property they intend to buy.
Imagine you have sold a property that you used to jointly own with your ex-partner. You receive your share of the sale proceeds, which can go towards a deposit on another property, but it’s not enough to buy another house. Rather than taking out a normal mortgage, equity release on your new property may be an option.
‘You’re still taking out a mortgage secured on your home and it’s a lifetime mortgage with the added security of the Equity Release Council Standards,’ says MB Associates later life borrowing specialist, Leslie Morris. ‘You need to be over the age of 55 and the minimum value of your home is £70,000.’
‘Your income may not be sufficient for you to have a normal mortgage or may not meet lenders’ criteria, so a later life mortgage could be an option,’ adds Leslie. ‘It depends on your age, the value of the property and the amount you wish to raise. With equity release, you don’t have to make monthly payments so it could be an option to explore.’
Seek expert advice
If you are in this situation, it’s certainly worth seeking expert advice. ‘If your circumstances have changed dramatically, have a chat with an expert to see what options are available to you and what your borrowing budget is,’ adds Leslie. ‘Expert advice may mean you don’t end up making a rash decision about your future property at a time when life is already very stressful.’