Can I take out a 25 year mortgage at 54?

Can I take out a 25 year mortgage at 54 and what are my options?
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Drawing on years of experience mortgage adviser Katie Tucker - of mortgage broker John Charcol (www.charcolonline.co.uk) - answers your questions.

Rhod S asks
I am 54 years old and was a UK homeowner four years ago. I then sold the house and moved to France. I now live back in the UK with my partner (who is 43) and I'm not sure if we can take out a 25 year mortgage, given my age. We would be able to put up somewhere around £20,000 deposit. We earn £57,000 gross between us and my credit rating is good as far as I know.

Katie responds
Hi Rhod,

A lender should have no problem with you having sold four years ago. Some of them may consider you a first-time buyer again, which whilst feeling initially flattering (!) could affect what products they will offer you, this thankfully should not affect you as your deposit is very good.

A 25 year mortgage will take you to 80 in terms of lenders' full years, and this is beyond the upper limit of 70 or 75 for a lot of lenders. Lenders are currently in the middle of changing their rules on age at the end of mortgages following the recent changes to the laws on retirement age.

The general attitude will remain though: if you can show your income after you retire then you should be able to find some lenders who will be happy to look at your loan.

You need to be able to show evidence that your pension income will be enough to cover your mortgage payments ongoing. I am not keen on people borrowing into retirement however and always encourage my clients to think really hard about whether they could afford more now, in order to bring the term down.

Your combined income is £57,000. You can borrow at least £220,000. Your monthly take-home between you is around £3,500. £230,000 at a very average rate of 5.5% over 25 years is £1,350 per month, but over 15 years is £1,790 per month. Most retired couples live on less than half the income they are used to after retirement: so the question you should ask yourself is: would you rather be paying an extra £440 now out of your current monthly income, or a whopping £1,350 per month out of your £1,700 pension?

Please excuse my assumptions - you may have a lot of income to play with until you are 80, I have had limited information on your personal situation, but the idea is clear.

I would also suggest that you consider how each of you would cope with a large debt if they should lose they other one?

You could also think about putting part of the property on interest only if you intend to down-size later in life. If you intend to move again ultimately to something smaller, worth for example £300,000, you could consider putting only the £100,000 that you need paid off on 'repayment' and the rest on 'interest only' with the intention of paying it off with the sale of the property (about £1,170 over 25 years or £1,370 over 15 years).

If after all this you are still in the beneficial position of being able to afford your mortgage to 80, some lenders who can consider what you need include: Abbey, Halifax, Nationwide, West Bromwich Building Society, Accord, Derbyshire, Skipton, and Chelsea.

Best of luck with it all.

Katie.

If you have a question for Katie, go to www.myfinances.co.uk/askthemortgageexpert

For more information on the issues discussed here, go to www.charcolonline.co.uk or call 0800 358 5560.

Charcol Limited is authorised and regulated by the Financial Services Authority (FSA registration number 427339). The FSA does not regulate credit cards, personal loans or some investment mortgage contracts. Some Buy To Let mortgages are regulated by the Consumer Credit Act (CCA).