Introduction
We recently helped our customer purchase a home independently in Farnborough, Hampshire, following a relationship separation.
The main difficulty was finding a lender whose age and affordability criteria could accommodate the required mortgage term.
Our customer also had adverse credit in their credit history, which was another factor to consider when identifying a suitable lender.
There were also several practical considerations surrounding the purchase.
We arranged a repayment mortgage with Accord Mortgages on a five-year fixed rate, with no lender product fee. We also secured several interest rate reductions between the initial mortgage offer and completion, reducing our customer’s monthly repayments.
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The Scenario
Our customer was purchasing a property in Farnborough after separating from their former partner.
The deposit was coming from the equity in their previous jointly owned home. Their former partner was buying out their share of that property, with the funds being used towards the new purchase.
Our customer needed a mortgage of approximately £140,000, with borrowing of around 48% of the new property’s value.
As a single applicant relying on employed income, keeping the monthly repayments manageable was particularly important.
Our customer wanted a mortgage term of just over 20 years, extending to age 80, alongside a five-year fixed rate for greater certainty over monthly payments.
They also preferred a mortgage without a lender product fee and, where available, a cashback incentive to help with the costs associated with moving.
The Challenge
The main difficulty was finding a lender whose age and affordability criteria could accommodate the required mortgage term.
There were also several practical considerations surrounding the purchase.
Mortgage Term Extending to Age 80
Many mortgage lenders place restrictions on the age a borrower can reach by the end of their mortgage term, particularly where repayments depend on continued employment income.
Some lenders require pension income to be considered when a mortgage extends beyond their accepted retirement age.
For our customer, shortening the mortgage term would have increased the monthly repayments beyond what they could afford.
We therefore needed to identify a lender willing to consider their employed income over the longer term, rather than relying on projected pension income to support affordability.
Deposit Coming from a Property Buyout
Our customer’s deposit depended on their former partner buying out their share of the existing jointly owned property.
This meant the two legal transactions needed to be coordinated carefully.
The deposit funds had to be evidenced to the new mortgage lender, and the timing of their release needed to align with the purchase.
Property Survey Enquiries
During conveyancing, a question arose concerning the condition of the roof at the property being purchased.
This required further attention to the available survey information and an independent roofer’s report, alongside the solicitors handling the transaction.
What We Did
Researched Lenders Offering Longer Mortgage Terms
We began by reviewing our customer’s income, financial commitments and borrowing requirements to establish what monthly repayments would be affordable.
We then researched whole-of-market mortgage options, focusing on lenders able to consider employed applicants requiring terms extending into later life.
We also considered our customer’s adverse credit history when reviewing lender criteria to identify options suitable for their circumstances.
Our research identified Accord Mortgages as a potential option because its criteria could accommodate a capital repayment mortgage extending to age 80 based on earned income.
Before placing the application, we discussed the circumstances with a lender business development manager and the lender to establish whether the proposed approach could be considered.
This was important because obtaining the required term was central to making the mortgage affordable.
Reviewed Affordability and Supporting Evidence
We assessed our customer’s employed income, including their basic salary and guaranteed annual bonus, alongside their existing financial commitments.
The application was supported by employment income evidence, including payslips and a P60.
We also considered the deposit arrangements and the evidence required to demonstrate where the funds would come from.
Coordinated the Deposit and Property Enquiries
We worked alongside the solicitors to address the deposit arrangements relating to the transfer of equity in the previous property.
Supporting evidence included the mortgage offer associated with the former partner’s buyout.
During conveyancing, we also assisted with the review of the independent survey and roofer’s information following the enquiry about the property’s roof.
This helped us remain involved in the mortgage process while the legal and property matters were being addressed.
Monitored Mortgage Rates After the Offer
Our involvement did not end when the mortgage offer was issued.
We continued monitoring the available mortgage rates while our customer was progressing towards completion.
When lower rates became available, we arranged for the mortgage rate to be reduced.
We did this on multiple occasions between the initial offer and completion, allowing our customer to benefit from lower monthly repayments before moving into the property.
The Solution
We arranged a residential mortgage with Accord Mortgages.
The mortgage included:
- A capital repayment mortgage of approximately £140,000.
- A term of just over 20 years, extending to age 80.
- A five-year fixed interest rate.
- No lender product fee.
- £250 cashback on completion.
The longer repayment term helped keep the monthly payments manageable, while the five-year fixed rate provided certainty over the interest rate during the initial fixed period.
The absence of a lender product fee and the cashback feature also aligned with our customer’s preferences.
Why This Solution Worked
The key factor was Accord Mortgages’ ability to consider the customer’s employed income over a repayment term extending to age 80.
This allowed us to arrange the longer term required to meet their affordability needs without depending on projected pension income.
The five-year fixed rate also matched their preference for payment stability, while the product structure avoided a lender product fee.
Importantly, we were able to secure further interest rate reductions after the initial mortgage offer, improving the outcome before completion.
The Result
Our customer successfully completed the purchase of their new home in Farnborough with a mortgage in their sole name.
We secured the required longer repayment term and a five-year fixed rate product with no lender product fee and £250 cashback.
By continuing to monitor available rates after the mortgage offer, we also reduced our customer’s interest rate and monthly repayments several times before completion.
Our customer was delighted with the savings achieved through this ongoing support.
What This Case Shows
Arranging a mortgage that extends into later life can require careful research, particularly where affordability depends on continued employment income rather than pension income.
Different lenders have different approaches to maximum mortgage terms and the age to which earned income can be considered.
Where an applicant also has adverse credit, finding a suitable lender may require additional consideration of their credit history alongside affordability and maximum mortgage term criteria.
As this case demonstrates, a conventional capital repayment mortgage may still be possible with a term extending to age 80, depending on the lender’s criteria and the applicant’s individual circumstances.
Our guide to mortgages for older borrowers explains some of the options and considerations involved.
This case also highlights the value of reviewing mortgage rates between the initial offer and completion. Where a lender permits a rate change and a more suitable deal becomes available, there may be an opportunity to reduce the customer’s borrowing costs before completion.
Need a Mortgage That Extends Into Later Life?
If you are moving home and need a longer mortgage term, Kerr & Watson can review your circumstances and explain which lenders may be suitable.
We provide independent, whole-of-market mortgage advice in Farnborough and the surrounding areas.
Contact Kerr & Watson to discuss your mortgage options.
