With the current economic turmoil due to both Brexit and Covid-19, many UK mortgage brokers have continued to be accused of being ‘ageist’. This is because many are lowering their maximum age limits on traditional mortgage lending for an older borrower from 80/85 to an upper age limit of 70 years.
Since the last recession over 10 years ago, banks still have less money to lend and have put in place strict lending criteria (and recent events have not helped), which has resulted in some older people over the age of 70, being refused a regular mortgage. Many critics believe that this is just another continual sign that banks only want to concentrate on helping young buyers to get on to the property ladder.
Although these age restrictions normally apply to those aged 70 and above, they are having a severe impact on people much younger. Many people in their fifties, who are looking to re-mortgage their house are also discovering that due to the age limits, they will have to make much higher repayments over a shorter period which could make the repayments on their mortgage unaffordable.
When it comes to purchasing a property and applying for a mortgage, Simon Conn, overseas mortgage expert with 35 years’ experience in the financial services industry, has shared his comparison of how the over 60s are currently treated in France.
“In France, the age cap is 80 and lenders base the mortgage agreement on the age of the oldest borrower. There is also a minimum mortgage term of five years.
Various incomes are considered and can possibly include 100% of an applicant’s pension income, 75% of the rental income and some banks and building societies also take 50% of the investment income.
If the applicant is employed and their employer confirms a higher retirement age, which is different to the state age, then some banks will consider this. However, if they are over the age of 55 at the time of application, some lenders will only take 70%-75% of employed income into account.
As the applicant would be considered a ‘riskier’ client for the lender, they may also require enough savings or security to cover the mortgage amount. One issue the applicant will need to address is that of life insurance cover for the mortgage. There is often a solution, but higher premiums may be required.
Finally, it is worth noting that if a mortgage is required as part of a larger private banking transaction – such as over £1 million – then the above lending criteria could become less applicable and the eventual loan would be underwritten and assessed on a case by case basis.”
If you would like to start the ball rolling on assessing your eligibility for a French mortgages, please get in touch: [email protected]