According to an announcement sent out to all brokers this morning, Halifax is set to make a significant change to its lending policy from Tuesday the 1st of August 2023. The bank will be increasing its maximum working age for mortgage applications, allowing customers to use earned income up to the age of 75 rather than relying on retirement income alone. This decision could come as a welcome relief for individuals who wish to continue working beyond the age of 70, and could reduce their monthly mortgage payments with longer terms.
New Maximum Working Age for Mortgage Applications From Halifax
The increased maximum working age criteria from Halifax applies to both employed and self-employed customers, and there will be no exclusions based on occupation types. This means that individuals from all professions can benefit from the extended maximum working age increase, provided they meet the necessary criteria. Customers planning to apply for mortgages under the new policy are urged to carefully assess the sustainability and plausibility of their occupation and their ability to work until their anticipated retirement age. For example, could a manual labourer realistically work until the age of 75? Halifax’s guidelines says that it is essential to ensure that their income position remains stable from the time of application until the end of the mortgage term. Additionally, customers should be aware of the potential risks if they are unable to sustain their income as projected.
What Do You Need To Do at Application Stage?
For those applicants who are looking for a mortgage term that extends beyond the working age of 70, Halifax will introduce a new ‘Customer Working Age’ form. All applicants, regardless of age, will be required to complete this form during the application process. This form will ask customers to confirm that they have considered the implications of their chosen mortgage term and believe they can continue working until the indicated age. Halifax has made the form easily accessible to mortgage brokers through their website literature page. Advisors will then be able to submit the completed form via Halifax’s document upload system, making the application process a lot smoother. The form does not require physical signatures and can be electronically signed by typing the borrower’s name. It is important to note that no mortgage offer will be issued until the Customer Working Age form has been completed and submitted.
To make sure that borrowers are making informed decisions, Halifax will also introduce a new letter titled ‘Information about your mortgage term.’ This letter will be sent to customers who have chosen a term that extends past the age of 70. The letter will serve as a reminder that the applicants have confirmed their ability to continue working throughout the mortgage term. It will be dispatched approximately five days after the mortgage offer and will also be accessible online through the document store.
Are There Any Other Restrictions To the Maximum Working Age?
It’s important to point out that the increased maximum working age for mortgage applications applies only to capital and interest repayment mortgages. For mortgages that involve an interest-only component, the maximum age will remain at 70 years old. When the lending period goes past either the borrower’s anticipated retirement age or a maximum working age of 75, affordability will be based on projected future retirement income such as pension or investment income.
This new policy by Halifax reflects a growing trend of individuals choosing to work beyond the traditional retirement age. The increase in the maximum age is likely to encourage many customers who are willing and able to continue working, providing them with greater access to mortgage financing and homeownership opportunities in a difficult property and mortgage market.
Speak To a Mortgage Advisor
If you are interested in this recent development from Halifax, the best thing you can do is discuss your options with a professional qualified mortgage broker. Call our team at Oportfolio today or send us an email to get a meeting booked in with one of our advisors. Our initial mortgage consultations are free of charge, and we can offer you the help and guidance you need to make informed decisions about borrowing past standard retirement age.