As we get nearer to retirement age, then out financial options could be limited. This is because we often need an income to be able to borrow money and so if that income is ending then we may not be able to borrow. Remortgaging could be the same as lenders will want to see that we will have a good income coming up to retirement in order to afford the mortgage payments..
What is remortgaging
Remortgaging is when we change the mortgage that we have. This can happen when we move house and we might change the amount that we borrow as well as changing our lender. It can also happen while staying in the same house, when we change the lender that we are with.
There are many reasons why we might decide to change lenders. It could be that we have found one that is a lot cheaper and so want to save money. It could be that we want one with a local branch or with better customer service. It may be that a friend or family member has recommended one which looks a lot better than your current one. Some people decide that they do not like their lender, perhaps because of their ethics or stories about them in the news. This is an individual thing and many people do choose to change their lender at some point during the term of their mortgage. It can often be because they can get a cheaper price. Sometimes we get a fixed price deal to start with and then when we move onto the variable rate it is not competitive and so we want to change to a lender with a better rate.
Why might age effect it?
A mortgage is very long term loan and can often last around twenty five years. This means that lenders want to look into the future and make sure that they are happy that you will have the funds to make the repayments all the way through the term of the loan. If you are reaching an age where you may be returning soon then it is likely that you will see a drop in income, with your earnings going down so you will be receiving a pension rather than a salary. Often a pension is a lot less than we would earn on a salary. It could be that you have a joint mortgage and one of you will be at this stage before the other.
Your current lender, will not review your situation and obviously was happy with the risk when they took you on. However, a new lender may reassess things. They may not just look at your income and the possibility of retirement making it lower but they could also look at your age and the possibility that you may have to stop work through ill-health before you reach retirement age. This increase in risk may mean that they are less likely to lend to you or that they will offer you a higher rate due to the increased risk.
What options do we have?
Thee will be a difference between the attitudes of different lenders though. This means that it is well worth doing a comparison of many different mortgage companies to see whether there are some that are significantly cheaper than others. This is because they have different ways of deciding how risky a potential borrower is.
It is therefore wise to compare lenders. You can do this using a comparison website, but they will not include all lenders. You could use a mortgage broker but again they will be limited in the lenders they compare and they take commission, like the comparison sites, so may only include lenders that pay good commission. A financial advisor could be better if you pay to see an independent one as they do not earn commission and so will not be biased. You will have to pay but it could be well worth it if they find you a lender that will save you a significant amount of money. They also have a lot of knowledge about mortgages and the different types, which could be useful for you, especially if you do not know that much about them.
So it is worth looking around at your options even if you are near to retirement age. You age may limit how many lenders are prepared to give you a mortgage, but there will still be options out there and it is possible that you could still save a lot of money if you find the right lender. Therefore, taking some time to search what is available can be really rewarding as you could end up saving a lot of money which you could use to pay the mortgage off early or to spend on other things.