Getting a mortgage

With people living longer, having children later and generally needing more cash, more people over 50 are deciding to take out mortgages or remortgages. The amount you borrow is dependent upon a number of factors - what is the value of your current property? What you can realistically afford to pay back? And crucially in these economic times, what is your mortgage lender willing to lend?

Lenders are far more likely to consider you as a low risk case if you ask for a relatively low proportion of the value of your property.

If you are only just 60, some lenders may be willing to offer you a 25-year mortgage term. But the older you are, the more unlikely this is to happen. Lenders will only lend if they can see a return on their investment so if you are 65, go for a 15 to 20 year term, over 70 you will probably have to accept a term of 10 years or less.

The best mortgages are repayment mortgage (capital and interest mortgage) or an Interest-only mortgage. The consensus is that repayment method is better, but if you are prepared to sell your property and downsize and thereby clearing your loan at the end of the term, lower monthly repayments will be the advantage of an interest-only deal. As a rule of thumb, avoid a standard variable rate (SVR) of interest although this may be the only option if you have a bad credit rating. Two years is the average length of the cheapest fixes and the biggest discounts which are only attractive if you don’t have much money.

The problem with these deals is that they tend to be accompanied by an extended redemption penalty. This can tie you to the lender's standard variable rate for several years and this can cancel out the initial early savings.

Long term fixes of ten or more years will bring you a certain amount of certainty about the level of your future payments but if the interest rates fall significantly during this period, then you may be overpaying over the long term compared to other lending options. If interest rates rise over this period, then you can expect some good savings.

Medium deals of two to five years offer a balance between stability and flexibility. If your financial situation allows, take out a new loan over the same term that you have remaining on your old one or cut it even further.

  What's this?