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"Older people should be able to make the same choices about managing their money as the rest of the adult population."

09 May 2016

Gocompare.com comments on Nationwide increasing their maximum mortgage age to 85

Commenting on Nationwide increasing its maximum age limit for mortgages to 85, Gocompare.com's head of money, Matt Sanders, said: "This is positive move from Nationwide but mainstream lenders need to go further. If a borrower can show that they can afford mortgage repayments, their age should be immaterial. There are plenty of baby boomers with reasonably generous final salary pensions who can afford to carry some debt in their retirement and many more will be choosing to work for longer too, not only because they have to, but because they want to.

"Increasing the upper age limit for mortgages means that more older borrowers in their own homes will be able to move without having to drop a price bracket, or can consider re-mortgaging to get a better interest rate or release some equity in their home. Some may wish to consolidate other debts to reduce outgoings or to give some money to children and grandchildren. Older people should be able to make the same choices about managing their money as the rest of the adult population.

"The other effect of this change is that borrowers in their 40s and 50s will be able to take mortgages over longer terms, which will substantially reduce the monthly cost and help them to pass the stricter affordability criteria brought in by the Mortgage Credit Directive (MCD). The monthly cost of a £200,000 repayment mortgage taken over 35 years at an interest rate of 3% is approximately £770 per month compared to £948.00 per month over 25 years. Although the borrower may sell the property long before the 35 year term, the lower monthly cost saving of £178.00 could make the difference between qualifying for the mortgage in the first place and being declined."

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