Lenders' retirement age for mortgages

This has been a long time coming. Most other big names in the industry already allowed this and Halifax were just playing catch up. It is a positive move coming from the largest lender, I think this will help them retain even more clients as it allows the clients to offset the higher rates coming through.

Halifax have finally woken up and seen the market pressures force their hand and allow borrowers take their mortgage terms to 75. This is to allow payments to become more affordable and borrowers to stay in their homes as rising costs are starting to hit families hard. It’s a welcomed change to offer breathing space and flexibility with the hope rates reduce over the next couple of years.

Good news for Halifax mortgage customers, as the bank has finally caught up with its peers by updating its retirement age, likely spurred by the recent Mortgage Charter allowing longer terms in order to reduce monthly payments.

We expected the Halifax to make this decision sooner than they did as most other lenders have accepted employed/self employed income to 75 years old for some time now.

Increasing a mortgage term to a maximum of 75 years old could well be a lifeline for households under strain from increasing mortgage interest costs on top of the cost of living crisis that we find ourselves in.

Increasing a mortgage term in an attempt to support under strain households reduce their monthly costs is currently a go to lever for mortgage advisers.

To put this into context;

A mortgage of £150,000 over 20 years with a rate of 2% would cost £759 on a capital repayment basis.

The same mortgage at 5.5% would see this increase to £1,032
If we increased the term to 25 years (still at 5.5%) this would decrease the payment to £921

We would recommend discussing this with your mortgage adviser well in advance of your product ending so your options can be reviewed and you can receive formal advice.

This is a party that Halifax is fashionably late to, with many lenders already allowing borrowers to have their mortgage to age 75, or even beyond with some lenders. Whilst on a practical level at the moment it does allow people to extend repayment mortgage to help manage increasing mortgage costs, the real reason is the evolution of our working lives. More and more people simply not stopping just because they hit the state pension age, so this is lenders adapting their criteria to fit with their customer's changing needs and expectations.

With Halifax having added to the roughly 50% of mainstream mortgage lenders now allowing it to be an acceptable retirement age, 75 is fast becoming the new 70 which had become the previous benchmark.

Lenders need to constantly re-assess reasonable affordability assessment measures and react to changing demographics, working patterns and retirement expectations. This latest trend to later retirement ages is just another example of this and more accurately reflects the reality for many that working in some capacity for longer is increasingly likely. This can allow longer mortgage terms for some that may otherwise have been limited and furthermore in times of economic pressure can mean that monthly payments can be made more affordable than may otherwise have been the case. It's not a given that this will always be possible however and in many cases, additional checks may be necessary for lenders to establish and record the feasibility of retirement plans.

A big lender like Halifax increasing their max-age to 75 is very welcome news, Halifax is probably one of the biggest mortgage lenders in the UK so it will impact a considerable amount of first-time buyers and homeowners.

The increased age and ability to increase mortgage holders' mortgage terms will really help cushion the blow with substantially higher interest rates.

Increasing your mortgage term can come with some risks especially if you are close to retirement you need a solid plan to place considering how you are going to work and pay your mortgage until the age of 75.

Whilst it will help with lowering mortgage payments and help mortgage holders with budgeting you will ultimately pay more interest.

Halifax were probably the last of the ‘big boys’ to extend their maximum retirement age in fairness. It’s a move that was needed and along with their criteria in other areas will see them secure a good amount of business off the back of it.
Given the current financial climate, the mortgage term is something that we are reviewing with everyone client we meet.

A handful of lenders have had a retirement age above 70 for some years, most of which will use a “sense” check to ensure it is feasible for the applicant to work until this age. For instance, it may not be realistic for a bricklayer to continue working until age 75, whereas it is very possible that an accountant could continue their work until such an age. So long as the lender carries out these checks, there is no reason why more lenders cannot increase their retirement ages, particularly as many people are highly likely to have to continue working well past the state retirement age.

I am sure the reason for this change, with Halifax, is to enable borrowers to extend the term of their mortgage and, thus, reduce their monthly costs. The recent interest rate hikes have made this necessary for many borrowers who find themselves having to remortgage from a very low rate (typically below 2%) as their fixed rate expires. At PKS – Mortgage & Insurance Experts, extending the term of the mort

Halifax has implemented a revised maximum lending age of 75, a policy that is in alignment with several other prominent High Street lenders. Additionally, the bank will allow their existing borrowers the opportunity to extend the duration of their loan terms. While this adjustment offers a favourable avenue for borrowers seeking elongated terms to alleviate monthly payment burdens, it is imperative to engage a thoughtful consideration of potential longer-term ramifications. Specifically, the prospect of carrying substantial mortgage obligations well into someone’s late 60s and early 70s warrants a comprehensive evaluation. These advanced stages of life could potentially impact an individual's capacity to sustain gainful employment during the latter phase of the mortgage, especially if health issues kick in. It is plausible that in 25 to 35 years' time, we will see in the UK where a large number of homeowners will still have mortgage debt past the age of 70.