Halifax increases maximum working age for mortgages

Halifax has increased the maximum working age using earned income to 75, as of August 1.

With the lender now largely in line with the rest of the market, Mortgage Introducer spoke to brokers to find out what the move means.

Halifax ups maximum working age

Scott Taylor-Barr (pictured), financial adviser at Barnsdale Financial Management, said Halifax’s latest announcement is not “as scary as it sounds.”

The retirement age, previously set at 65 for men, was established back in the 1940s when the average life expectancy was under 70, so Taylor-Barr said retirement would last around five years.

“However, life expectancy is now around 80, but with the retirement age only edging up to 68, that leaves us with 12 years of retirement to fund,” he added.

Taylor-Barr said many people are simply not saving enough to fund a retirement of that length, and so the only option is to remain in some form of employment.

“This could be part-time to supplement their pension income rather than full-time, but it is more and more likely that people will need to have an earned income later in life; so Halifax, as with many other lenders, is only amending its criteria in line with how their customers’ working lives are evolving,” he said.

Market impact

Ben Tadd, director at Lucra Mortgages, said this long-awaited move will bring relief for many consumers whose monthly mortgage payments, up to the previous maximum age of 70, were simply not affordable.

“It also brings Halifax in line with many of the other big six lenders and will result in a small increase to their already substantial market share,” he said.

More and more borrowers, Tadd believes, will look to take advantage of this change of criteria and extend their mortgage terms, in order to reduce their monthly payments to a more affordable and sustainable level.

“Increasing your mortgage term is not without its risks, however - it of course means retiring much later in life, which may not be feasible for everyone, depending on their occupation type, and it also means paying a lot more interest, too, by taking the mortgage over a longer term,” Todd added.

Lewis Shaw, owner and mortgage expert at Shaw Financial Services, said Halifax has been an outlier in this area for a while, given its size. “However, its latest announcement is a welcome move by one of the biggest mortgage lenders in the UK,” he said.

Shaw believes this decision will likely see the lender increase its market share, however he warned that borrowers need to be careful. Anyone considering taking a mortgage past the state retirement age, Shaw said, needs to think carefully about the sustainability of paying a mortgage up to the age of 75.

“When consumers are in their 30s or 40s, they may feel as though working until 75 is achievable, but speak to anyone that is that age, and you will likely hear a very different story,” he added.

Craig Fish, director at Lodestone Mortgages & Protection, agreed with Shaw that Halifax’s latest announcement was long overdue.

“In this day and age, it is more common for people to work beyond state retirement age, so I expect this offering to be popular among consumers,” he said.

Furthermore, Fish added that people are coming on to the property ladder, especially in London, at a much later age, so having the option of a longer mortgage term opens up more options for borrowers, which he believes can only be a good thing.

“Of course, it is riskier having a mortgage at this age, but as long as the client has received proper advice and understands the implications, it is not an issue,” Fish said.

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