how-to-get-a-mortgage

How to Get a Mortgage If You’re over 50, Self-Employed or a First Time Buyer

Making a mortgage application is a big and exciting moment, whether it’s your first home or you’ve been here several times before. If you’re over 50 or self-employed, the thought of getting a mortgage can be daunting, as older borrowers or those not in full-time employment can find getting a mortgage a little more difficult.

The good news is that there are plenty of options out there for you. Here’s everything you need to know about getting a first-time buyer mortgage, and having your application accepted if you’re over 50 or self-employed.

Can I get a mortgage if I’m over 50?

Mortgages for over 50s are available, but you’ll find that your options begin to change as you get older. Fortunately, you should still have plenty of choice and flexibility when looking, especially if you’re in your early 50s and are able to apply for a standard 25-year-mortgage.

What usually stands in your favour as an over 50, is that your income is generally at its peak. You’re likely to already be a homeowner with a property that has built up equity, or you have enough in savings to cover a decent deposit.

It’s around this time in life that many also look to downsize the family home, as the children have moved out, meaning you’ll be cutting mortgage costs by moving to a smaller property. In either case, you should find the mortgage process relatively straightforward, so long as you also still have a reasonable credit score.

Things may not be quite so straightforward if you’re over 50 and are looking to take on your first mortgage, largely because there’s a chance you’ll have retired before you’ve finished paying off the mortgage. This means you’ll no longer have a regular salary coming in, or will be on a lower income, which can dent a lenders confidence that you’ll still be able to afford the mortgage repayments.

Lenders must follow the Mortgage Market Review (MMR) rules, which mean they have to make sure you can keep up with repayments over the full term of the mortgage. So, while you might still be able to take out a mortgage in these circumstances, lenders will see you as a bigger risk.

This is also why acceptance for mortgages for over 60s and older age groups becomes more difficult.

Is there an age limit for getting a mortgage?

The minimum age for taking out a residential mortgage is usually 18, or 21 if you’re looking for a buy-to-let mortgage. Although there is no maximum age for applying for a mortgage, lenders have their own criteria, with maximum ages for taking out a mortgage usually lying somewhere between 65 and 80.

Many will also only lend on the condition that the mortgage term ends when you’re aged between 70 and 85 or when you retire, whichever is sooner.

Is there an age limit for getting a mortgage?

If you’re over 50 and looking to take out a mortgage, here’s how you can improve your chances of being accepted:

Save a large deposit - Lenders are very reassured by large deposits – not only does this show a level of commitment at your end, but it reduces the risk to the lender as you’ll be borrowing less. Try to bring together as big a deposit as you can reasonably manage or use any equity you make when selling your current property, particularly if you’re planning on taking out a mortgage over a relatively short term, such as 10 years.

Reduce the mortgage term - Once you get past 50, lenders will have your retirement in mind, even if this is still 15-20 years into the future. Taking on a shorter-term mortgage, with repayment terms over something like 10-15 years, can increase the likelihood of acceptance as you should have the final payment made before or shortly after you retire.

Prove you can make the repayments - If your mortgage repayments stretch beyond your retirement age, you’ll have a better chance of acceptance if you can prove to your lender that you’ll still be able to keep up with repayments once you’re out of work, using any existing pensions or investments.

Can I get a mortgage if I’m self-employed?

If you’re self-employed, you certainly can get a mortgage and should be eligible for the same range of mortgages as anyone in full-time employment. The only thing to bear in mind is that getting your application accepted can be more of a challenge, because you need to prove you have a reliable income. This will likely involve collating the following:

- Two or more years’ certified accounts

- SA302 forms or a tax year overview (from HMRC) for the past two or three years

- Evidence of upcoming contracts (if you’re a contractor)

- Evidence of dividend payments or retained profits (if you’re a company director)

How to improve your chances of getting a mortgage for self-employed borrowers

So long as you can supply enough information about your income, you should be able to get a mortgage on the same terms as someone in full-time, salaried employment, but there are ways to improve your chances of acceptance:

Prove you have a reliable income - Lenders always want to minimise their risk, so making sure all your accounts are up to date and proving that you have a reliable income stream will them view you more favourably. Not only will this improve your chances of acceptance, it might even secure you a better interest rate.

Hire an accountant - It also helps if your accounts have been prepared by a qualified chartered accountant, as this helps confirm the accuracy of your accounts and your own reliability.

Have at least two years’ worth of accounts available - Lenders usually require at least two or three years’ worth of accounts. If you only have one years’ worth, you’ll most likely have to provide evidence of regular work or future contracts.

Make sure your credit score is up to scratch - Since the introduction of the Mortgage Market Review in 2014, mortgage providers have tightened up their lending criteria. To help improve your credit score, avoid maxing out credit cards or making multiple loan or credit card applications in a short space of time.

It could also help to run your finances through a self-employed mortgage calculator before you apply, to give yourself a better idea of the amount of borrowing you’ll reasonably be able to take on.

Can I get a mortgage as a first time buyer?

You can get a mortgage as a first time buyer, and this group of homeowners account for a large part of the UK property market. Figures from UK Finance show that mortgage providers lent £62 billion to around 370,000 first-time buyers in 2018, which is the highest number since 2006.

There are plenty of mortgages available to you if you’re looking to take your first step on the property ladder and lenders will look at a range of factors when considering your eligibility. Take a look at our Mortgage Myths Busted to learn more about getting a mortgage.

How to improve your chances of getting a mortgage if you’re a first time buyer

There are a number of ways you can increase your chances of being able to take on a first time buyer mortgage, including:

Saving a larger deposit - In general, the bigger your deposit, the greater your chance of being accepted for a mortgage. While 95% mortgages are available, if you can put down any more than this, lenders will view your application more favourably. But don’t fret if this isn’t an option for you.

Make sure you’re on the electoral roll - Lenders will always check whether you’re registered to vote at your current address, whether you’re applying for something as small as an overdraft or as big as a mortgage. So make sure you’re on the electoral roll before you apply.

Work on your credit score - A good credit score is important for anyone looking to take out a mortgage, so make sure yours is up to scratch before applying. This means not maxing out on credit cards and overdrafts, and avoiding making multiple applications for credit in a short space of time.

Get a family member to help - If you’re struggling to save for a deposit, but can comfortably meet your monthly mortgage repayments, Post Office Family Link is a mortgage solution that could help. It’s made up of two loans, the first being a 90% loan-to-value (LTV) mortgage against the property you’re buying. Then, with a parent or close relative acting as your assistor, you take out a mortgage for the remaining 10%, which is then secured against your assistor’s mortgage-free home. This is interest free and must be repaid in five years.

Alternatively, if you have saved enough deposit, but are limited on how much you could borrow, Post Office First Start mortgage can include a family member's income in your assessment.

Get the right mortgage with Post Office

Whether you’re a first time buyer or an over 50, you’re self-employed or in full-time employment, it’s vital to get the right mortgage to suit your needs and budget. At Post Office, we want you to have confidence in finding the right mortgage for your circumstances. That’s why we’ve teamed up with Bank of Ireland UK to offer a new mortgage range that could work for you. Use our mortgage calculator to get an estimate of how much you could borrow, or find out more on mortgages at Post Office Money.

If you’ve seen the house of your dreams is being built or has just been completed, here’s how to go about buying a new build property.

Further reading for your home

Is your lifestyle mortgage ready?

Find out if you’re financially ready to buy

10 questions to ask estate agents when viewing a property

Get the right information about your dream home