Nationwide has become the latest UK bank to raise its borrowing limit. Previously it had been set at 75.
You could now apply for a mortgage if you are aged upto 80 and will have a 5 year mortgage term if you wished to do so.
This follows in the foot steps of the recently announced age limit of 80 announced by the Halifax. Stephen Noakes, Halifax’s managing director for retail customer products, said: “As demographics and working habits continue to change, we continually review our products and policies to ensure they reflect the evolving needs of our customers, including those who wish to continue working longer.”
Why the Increase to Mortgage Application Levels for Older People?
One of the main reasons is that people cannot gain mortgages in their 20s as they used to. This has now had the knock on effect of pushing the age application level well into their 30s. Even that is slowly spiralling into the early 40s as people are opting to rent instead.
The increase in divorce rates especially in the 50s is another issue affecting older borrowers. Many of these divorcees have to start again and attaining an affordable property is not getting easy.
Many people in the past opted for interest only loans, these are coming to an end. This has left a large number of older people with loans that they don’t have the capital to pay off.
Of course there is also a genuine need for mortgages later on in life to go hand in hand with people who are actually working into their 70s. No longer are people retiring early. It makes sense to accommodate these older workers.
Consequences of Older Aged Borrowing
The current age expectancy is around 75 so what would happen if the person died before the mortgage was paid?
As long as houses prices continue to increase then Banks should cover their outlay. Though if living family members are in the property then would they inherit the loan.
Tom McPhail, head of pensions research at Hargreaves Lansdown, is pretty relaxed. He said this to the BBC Radio 5 Live’s Wake up to Money:‘Why pay off the mortgage at at all? Having lent the money and let someone buy a house, why not just let it run until the day they die? As long as the value of the property is there to meet the liability in the future, why worry about paying it off when you are alive?’