Over 40s battling age restrictions in the mortgage market
A new report from the Nottingham Building Society has warned that age restrictions are hindering customers in their 40s who are looking to get a mortgage or re-mortgage.
Its study among mortgage brokers shows nearly two out of five (37%) have seen a rise in customers over 40 struggling to be approved for mortgages or remortgages.
And the research shows the problems will continue this year – more than a third (34%) expect the number of over-40s struggling to secure home loan deals will rise again in 2016.
The scale of the issue is underlined by research among customers who have been turned down for mortgages or remortgages in the past two years – around 17% of those who have been rejected say their age was a major reason. That rises to 21% among those aged 45 to 54.
Around one in four of those whose age counted against them say they were not able to borrow for long enough while the rest were turned away because either they or their partner were too old.
Older borrowers are suffering as lenders need to be able to prove customers have the income to afford loans which is not certain once they retire meaning people in their 40s wanting to borrow past retirement can struggle to get a mortgage.
Mortgage lenders are working hard to ease the rules which count against older borrowers – the Council of Mortgage Lenders and Building Societies Association are both working with members to make it easier and some lenders have increased their maximum ages.
Ian Gibbons, Senior Mortgage Broking Manager at Nottingham Mortgage Services (part of The Nottingham), said: “It is baffling for people in their early 40s to be told they are too old to have a mortgage and particularly so when the average age of first-time buyers is rising which means some could even be first-time buyers.
There is no doubt creditworthy customers are being rejected and some are facing restrictions on their choice of mortgages.
However there are options out there for older borrowers and the key to ensuring they get the most appropriate mortgage is to search the whole market. If your existing lender is restricted on what it can do there are other options.”
The Nottingham’s research shows the main reason for being turned down for a mortgage or remortgage is a poor credit history – 38% of those who were turned down say their credit record counted against them while 19% were rejected on grounds of affordability.
The goal of Nottingham Mortgage Services is to find the best mortgage deal for customers by offering a fee-free service that searches over 50 lenders. From first-time buyer mortgages, re-mortgages through to mortgage for house purchase and buy-to-lets, it has been successfully helping people find the right deal on their mortgages for a number of years. Its expert advisers search the whole of the mortgage market, looking for the best deals. They explain the costs and benefits of each mortgage and will only recommend a mortgage that is right for the customer.