Tips and considerations for older first-time buyers
Being an older first-time buyer can present obstacles that don't apply to younger buyers. Learn what steps you can take to remove them.
In theory, it's never too late to buy your first property. In practice, however, there can be obstacles or considerations that don't affect younger house-hunters.
The main issue, as for most people, is getting a mortgage. You can be a cash buyer until the day you shuffle off the property ladder – but when a mortgage lender is involved, it's not impossible, but it is more difficult.
In this article, we take a look at some tips and considerations for older first-time buyers.
Are you ever too old to get a mortgage?
Most mortgages are long-term commitments. While short-term mortgages do exist, they tend to be the preserve of people with lots of money in the bank.
A mortgage lender's primary concern is that their loan will be repaid – so if you're an older first-time buyer, they want reassurance that you'll be able to meet your commitment. For this reason, they'll probably think twice about lending to someone past retirement age.
Every bank and building society will have its own upper-age limits for mortgage applications. These will cover both how old you are when you take out the mortgage and how old you'll be when the mortgage term ends.
The main thing is to demonstrate that you can repay, either by making bigger monthly repayments in a shorter time or by making the mortgage lender aware of assets, pensions and other funds.
If you can, pay off quickly. This is the advice of
Kat Holmes, a corporate director and first-time buyer who bought a two-bedroom London flat aged 48. "As an older first-time buyer," she says, "the best advice is to buy something you can pay off quickly."
What support is available for older first-time buyers?
It depends on how we define "older". Under-40s can get a Lifetime ISA – a government-backed savings account intended for house-buying and retirement savings.
For every four pounds you put into the Lifetime ISA, the government will add a pound. You can put in £4,000 each tax year, meaning a £1,000 bonus.
Then there's the Older Persons Shared Ownership scheme (OPSO). This is a government-backed scheme in England for first-time buyers aged 55 or over with a gross annual household income of £80,000 or less (£90,000 or less in London).
It works in the same way as the standard shared ownership scheme. If you can't afford to pay the deposit and mortgage on a home, you can buy a share in it worth between 10% and 75% of its market value. You then pay rent on the rest to the housing provider.
As with any shares, it's possible to buy more as time goes on. This is known as "staircasing".
With OPSO, you can only buy up to 75% of the market value of the home, whereas younger first-time buyers can buy the whole lot. However, once you've secured the 75%, you don't have to pay rent on the remaining quarter.
Getting a mortgage when you're over 50
It can be more difficult for over-50s to get a mortgage than younger first-time buyers. At the very least, you'll find your options begin to change.
If you're in your early 50s and are applying for a standard 25-year mortgage, you should have plenty of choice. From a lender's perspective, you're a desirable candidate: probably at peak earning power with savings in the bank.
As with any first-time buyer, your credit score will be a factor. If you have debts, you should pay them off before you apply – otherwise, they'll negatively impact your borrowing potential.
The variable that hangs over a mortgage when you're over 50 isn't death but retirement. Look at it from the lender's point of view: if you retire before you finish repaying the loan, they can't be sure you'll be able to do so without a regular salary coming in.
This isn't just self-interest on the part of lenders. It's also because they're bound by Mortgage Market Review (MMR) rules. They have a professional interest in making sure you keep up with your repayments.
This doesn't necessarily spell disaster for your mortgage dreams. It just means that you're seen as more of a risk – so you may need some take a few extra steps.
Improving your chances of getting a mortgage over 50
Here are three things you can do to boost your chances of getting a mortgage as an over-50 first-time buyer:
- Save a large deposit. This will reassure lenders that you've been financially prudent and will be asking to borrow less.
- Apply for a short-term mortgage. Retirement is looming, even if it's 15 or 20 years away. A shorter-term mortgage of, say, 10 or 15 years can boost your chances. It means your final payment will be made before you retire (or just after).
- Demonstrate that you can make repayments via pensions, investments and other sources of money.
The bad news is that all of these steps require having more money to spend year-on-year than a first-time buyer who's under 50.
Who is the UK's oldest first-time buyer?
We don't know for sure, but it could be
Edward Simon Jones.
Jones lived on the Bychton Hall family farm in Mostyn, Flintshire, Wales all his life, before moving into an assisted care facility. But he wanted his own property, so he bought himself a bungalow at the age of 86.
Final thoughts
It's undeniably more difficult to be an older first-time buyer – at least where mortgages are concerned. As with many things in life, having plenty of funds set aside will help you on your way. It's always worth shopping around and seeing what different lenders offer.
Whatever your situation, we wish you all the best in your house-hunting journey!
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