Age barrier puts block on older borrowers

Your date of birth could stop you getting a loan from some banks and building societies, despite your ability to pay it back, says Chiara Cavaglieri

The UK population may be living and working for longer, but this hasn't stopped lenders running scared from older borrowers. And while no one wants to return to the reckless lending that led to the financial crash, stricter terms and blanket age restrictions could have serious implications, leaving many responsible borrowers struggling for mortgages, loans, credit cards and overdrafts.

Mortgages

West Brom is the latest lender to cut the maximum age a borrower can be at the end of their mortgage term from 80 to 70 years old.

Previously, the building society would allow its borrowers to take out a home loan well beyond retirement, as long as they could prove they were able to afford the monthly repayments. As of last week, however, any West Brom mortgage must end before the person reaches 71. It was also announced that any interest-only borrowers will no longer be able to sell their mortgaged property – or any other property – as a repayment vehicle.

"It is getting harder for older borrowers both to get a mortgage in the first instance and then to remortgage when they come to the end of their existing deal. Lenders have been tightening their criteria, with many now not wanting to lend beyond the age of 70 or 75," says Jonathan Harris, director of mortgage broker Anderson Harris.

The biggest hurdle for older borrowers is that they must prove their income in retirement to the lender. With more people forced to wait until they are well into their 30s to get a first foot on the housing ladder, it is increasingly likely that more pensioners will need mortgages – and tighter age restrictions could mean that even homeowners in their late 40s and 50s are unable to remortgage, or move home.

"Our view is that it's grossly unfair to restrict loans in this way – people need to be judged as individuals," says Paul Green, a spokesman for Saga. He adds that financial institutions have not caught up with a society in which retirement is often phased with people reducing their hours and taking on part-time roles.

"Society is changing; people are working longer and their capacity to earn money and repay loans continues well into later life", he says.

Older borrowers on interest-only mortgages have an even tougher challenge on their hands. Many banks and building societies have stopped offering these loans altogether and existing borrowers are being forced to move on to more expensive repayment deals if they want to move home or remortgage.

There are around 600,000 homeowners with interest-only mortgages due to mature before 2020 and with lenders lowering their upper age limits, borrowers with a shortfall could find they have few options open to them. It's not all bad news, however, as there are still lenders (predominantly building societies) who will give loans up to age 80 or above, or have no upper age limit at all such as Bath, Darlington, Monmouthshire and Mansfield building societies, the Post Office, Metro Bank, and specialist providers such as Newlife, which is aimed specifically at borrowers over retirement age. The likes of Abbey, Coventry, Halifax, Leeds, Nationwide, Skipton and Virgin Money all lend up to age 75.

Talking to an independent mortgage broker should open up more of the market, including some private banks which, unlike high street lenders, may be willing to lend to older people with limited incomes as long as they are asset rich.

"Private banks do tend to want to lend to these individuals as the wealth-management opportunity will be significant when the existing family home is sold and other investments are cashed in to fund the remainder of their retirement and the passing on of wealth to their children," says Mr Harris.

Equity release could also replace conventional mortgages for older borrowers. These so-called lifetime products allow homeowners to release a cash lump sum using the equity in their property, and repay this money as well as the interest (which is added to the outstanding debt) when you sell your home or pass away. Home reversion is another option – here you sell a percentage of your property in exchange for a single lump sum, continuing to live in your property rent free until you sell up. With both there are significant pitfalls, not least because you are effectively just using one form of loan to pay off another, so do your research before committing.

Personal loans

Mortgages aren't the only hurdle for older borrowers and many people find their age prevents them from being accepted on the most competitive personal loans and credit cards too. Looking at best-buy loans of £5,000 over three years, Hitachi Capital imposes an upper age limit of 60, while both Tesco and Clydesdale restrict their personal loans to people aged up to 74. Similarly, Derbyshire BS won't offer its market-leading loan for £10,000 over five years to anyone over 79.

Credit cards don't impose a maximum age as the money borrowed is designed to be used over the short term, rather than for longer periods, however, many of the better cards do have minimum salary requirements, which could exclude many older people. The Co-operative Bank Platinum Fixed Rate Visa, for example, requires applicants to have an income of at least £25,000, while Barclaycard has a minimum income set at £20,000 for several of its top cards.

With all these things the message is to shop around and keep in mind that if you're told no that doesn't mean there aren't other companies who would love your custom.

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

PROMOTED VIDEO
Arts and Entertainment
glastonbury
News
i100
Arts and Entertainment
Shock of the news: Jake Gyllenhaal in ‘Nightcrawler’
filmReview: Gyllenhaal, in one of his finest performances, is funny, engaging and sinister all at once
Life and Style
Taste the difference: Nell Frizzell tucks into a fry-up in Jesse's cafe in east London
food + drinkHow a bike accident left one woman living in a distorted world in which spices smell of old socks and muesli tastes like pork fat
Arts and Entertainment
Kit Harington has been given a huge pay rise to extend his contract as Jon Snow in Game of Thrones
tv
Arts and Entertainment
Don’t send in the clowns: masks and make-up conceal true facial expressions, thwarting our instinct to read people’s minds through their faces, as seen in ‘It’
filmThis Halloween, we ask what makes Ouija boards, demon dolls, and evil clowns so frightening?
News
peopleFarage challenges 'liberally biased' comedians to 'call him a narcissist'
Arts and Entertainment
Liam and Zayn of One Direction play with a chimpanzee on the set of their new video for 'Steal My Girl'
music
Arts and Entertainment
Young Fathers are the surprise winners of this year's Mercury Music Prize
music
News
i100
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Finance Assistant - Part time - 9 month FTC

    £20000 - £23250 Per Annum pro rata: Clearwater People Solutions Ltd: Pro rata ...

    Marketing Manager

    £40 - 48k + Benefits: Guru Careers: We are seeking a Marketing Manager to join...

    Market Risk Manager - Investment Banking - Mandarin Speaker

    £45,000 - £65,000: Saxton Leigh: Our client is a well-known APAC Corporate and...

    Compensation and Benefits Manager - Brentwood - Circa £60,000

    £60000 per annum: Ashdown Group: Compensation and Benefits Manager - Compensat...

    Day In a Page

    The drugs revolution starts now as MPs agree its high time for change

    The drugs revolution starts now as MPs agree its high time for change

    Commons debate highlights growing cross-party consensus on softening UK drugs legislation, unchanged for 43 years
    The camera is turned on tabloid editors in Richard Peppiatt's 'One Rogue Reporter'

    Gotcha! The camera is turned on tabloid editors

    Hugh Grant says Richard Peppiatt's 'One Rogue Reporter' documentary will highlight issues raised by Leveson
    Fall of the Berlin Wall: It was thanks to Mikhail Gorbachev that this symbol of division fell

    Fall of the Berlin Wall

    It was thanks to Gorbachev that this symbol of division fell
    Halloween 2014: What makes Ouija boards, demon dolls, and evil clowns so frightening?

    What makes ouija boards and demon dolls scary?

    Ouija boards, demon dolls, evil children and clowns are all classic tropes of horror, and this year’s Halloween releases feature them all. What makes them so frightening, decade after decade?
    A safari in modern Britain: Rose Rouse reveals how her four-year tour of Harlesden taught her as much about the UK as it did about NW10

    Rose Rouse's safari in modern Britain

    Rouse decided to walk and talk with as many different people as possible in her neighbourhood of Harlesden and her experiences have been published in a new book
    Welcome to my world of no smell and odd tastes: How a bike accident left one woman living with unwanted food mash-ups

    'My world of no smell and odd tastes'

    A head injury from a bicycle accident had the surprising effect of robbing Nell Frizzell of two of her senses

    Matt Parker is proud of his square roots

    The "stand-up mathematician" is using comedy nights to preach maths to big audiences
    Frank Warren: Call me an old git, but I just can't see that there's a place for women’s boxing

    Frank Warren column

    Call me an old git, but I just can't see that there's a place for women’s boxing
    Adrian Heath interview: Former Everton striker prepares his Orlando City side for the MLS - and having Kaka in the dressing room

    Adrian Heath's American dream...

    Former Everton striker prepares his Orlando City side for the MLS - and having Kaka in the dressing room
    Simon Hart: Manchester City will rise again but they need to change their attitude

    Manchester City will rise again but they need to change their attitude

    Manuel Pellegrini’s side are too good to fail and derby allows them to start again, says Simon Hart
    Isis in Syria: A general reveals the lack of communication with the US - and his country's awkward relationship with their allies-by-default

    A Syrian general speaks

    A senior officer of Bashar al-Assad’s regime talks to Robert Fisk about his army’s brutal struggle with Isis, in a dirty war whose challenges include widespread atrocities
    ‘A bit of a shock...’ Cambridge economist with Glasgow roots becomes Zambia’s acting President

    ‘A bit of a shock...’ Economist with Glasgow roots becomes Zambia’s acting President

    Guy Scott's predecessor, Michael Sata, died in a London hospital this week after a lengthy illness
    Fall of the Berlin Wall: History catches up with Erich Honecker - the East German leader who praised the Iron Curtain and claimed it prevented a Third World War

    Fall of the Berlin Wall

    History catches up with Erich Honecker - the East German leader who praised the Iron Curtain and claimed it prevented a Third World War
    How to turn your mobile phone into easy money

    Turn your mobile phone into easy money

    There are 90 million unused mobiles in the UK, which would be worth £7bn if we cashed them in, says David Crookes
    Independent writers remember their Saturday jobs:

    Independent writers remember their Saturday jobs

    "I have never regarded anything I have done in "the media" as a proper job"