One news story that attracted our attention in 2015 was the one in which a bank was penalised for age discrimination after withdrawing a mortgage approval for a married couple in their 40s, on the grounds that the husband would be over 65 when the deal ended.
The Financial Ombudsman Service ruled in the couple’s favour and ordered the bank to pay them £500 in compensation, saying that the bank had relied on “untested assumptions, stereotypes or generalisations in respect of age”.
Should we be given the chance to keep up mortgage payments past the age of 65?
It’s arguable that being 65 today – in terms of health, lifestyle, fitness and expectations – is not the same as being 65 twenty, certainly forty years ago. And 65 being the default retirement age has been phased out, and people can work as long as they choose to – employers are no longer allowed to discriminate against workers choosing to work beyond 65.
The Mortgage Advice Bureau says that the average age of a first-time buyer is now 37, which would make a standard 25-year mortgage take them to 62. However, this figure is likely to creep up, as high house prices up and down the country take first-time buyer ages beyond 40.
The affordability factor
Lenders are keen to know whether you’ll you be able to afford it should interest rates go up, which they are likely to do, or if your circumstances change.
A major factor could be the mortgage affordability rules introduced in April 2014, which take into account not only how much you are earning, but how much you are spending, and whether you actually have the money to make your monthly mortgage repayment. It could even lead to longer-term mortgages, potentially taking people past 65.
The shape of your credit report
Keeping your credit report in order remains important if you are hoping to buy a property, as making sure your monthly repayments are made on time and keeping overall debt under control are likely to be key considerations for lenders.
Checking your credit report before you make the application can allow you to see what the lender would see, and give you chance to update any inaccuracies and correct any information that’s out of date.
This could be things like whether you have kept up to date with payments on other loans and credit cards, the total level of credit that you already have, and how much of that you’re using.
Some simple tips to get your credit report into shape, whatever your age:
– Try to avoid making multiple credit applications, as each one is recorded on your credit report – whether successful or not – and it may look as though you’re in financial difficulties.
– Try not to miss a credit repayment, as missed or late payments stay on your credit report for at least six years and can have a negative effect on how lenders see your application.
– Register on the electoral roll, as it proves who you are and where you live.
The Experian Credit Score is a guide to help you understand your credit report, and how the way you’ve managed the credit you’ve had in the past might affect applications you’re making now.