Lifestyle

We're nearing 40 – is it too late to buy our first property?


Q We are at a complete loss. We never imagined that we would be in a position to buy property as we have struggled for years to save but recently we have come into some money which we could use as a deposit. However, both my husband and I are nearing 40 so are we too late? Where do we even start with trying to organise a mortgage? Surely it would need to be a shorter term one. I am fearful of taking out too much and finding ourselves stuck at age 58 or higher. Most people our age are working towards paying their mortgage off whereas we would just be beginning. Should we just stick the money in a savings account instead?

A No, I wouldn’t just stick the money in a savings account. Buying a home of your own is clearly a long-term goal of yours even if you didn’t think it was an achievable one. And at nearly 40, you and your husband are spring chickens when it comes to being considered as older borrowers. Most mainstream mortgage lenders set the maximum age you can be at the end of the mortgage term at 70 or 75 so you could easily get a mortgage with a typical term of 25 years. At least 15 building societies – which, according to the Building Societies Association, ‘tend to be more flexible than high-street banks when it comes to maximum age limits’ – have scrapped upper age limits altogether. As a result borrowers can take out a 25-year mortgage regardless of their age at the time they apply for a mortgage.

But while your age isn’t a barrier to getting a mortgage, whether it will be affordable both before and into retirement is. You certainly don’t need to worry about taking out an unaffordable mortgage because lenders won’t let you. Not only are lenders required to undertake a detailed assessment of the affordability of a mortgage in relation to your income and spending, they are also required to stress test the effect of higher interest rates on your ability to make repayments. As well as your joint income, how much other debt you have will also affect how much you can borrow. So before applying for a mortgage, if necessary, it would be a good idea to look into paying off credit-card debts and or outstanding personal loans. As you don’t seem confident about organising a mortgage, you might like to use a mortgage adviser who can give you an idea about how much you can borrow and point you in the direction of a lender likely to offer you a loan. Finding out how much you can borrow in principle will also tell you whether property purchase is a viable option.



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