Are mortgages excluding older buyers from the property market?
Over a third of mortgage brokers have reported a sharp rise in those over 40 being rejected for a mortgage, according to claims in a new report by Nottingham Building Society.
The study showed that almost one in five rejected mortgage applications by those over 40 are due to age and an inability to afford the larger deposits necessary for shorter repayment periods. With the vast majority of first-time buyers taking out 30-35 year mortgages at an average age of 31, they will have paid off any outstanding balance before they retire.
Older UK home buyers, however, would have to continue making repayments well into retirement – a situation that makes many lenders uncomfortable.Those over 40 looking for a 20-year mortgage find approval relatively simple, but this requires a larger deposit, occasionally up to 30% of the house’s value. This means a relatively cheap home at £120k would require a deposit of £40k – an amount that is unfeasible for the majority of the working public.
This spells trouble for the property market, as now even those with disposable income are finding it hard to join the property ladder – reducing the pool of buyers searching for a new home. UK house buying experts believe that if this situation continues, prices in more upmarket locations could drop and those looking to sell their property fast are facing an uphill battle to complete a sale.
With the average age of first-time buyers gradually increasing, there is a strong possibility that within a decade, if a buyer has not secured a home before 40, they may be stuck in the rent-trap for life. While various lenders and administrative bodies are working hard to remedy the situation, the tenuous state of the market means that this is not a problem that will go away anytime soon. Luckily, for those looking to sell who are worried that the aforementioned issues could interfere with the process, there are home purchasing companies willing to buy any house and allow them to get cash for their homes.
If you’d like to generate some cash by selling your home, ask National Homebuyers for advice, as we buy any house. Call 08000 443 911 or request a call back to find out how much you could get for your property.