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UK’s biggest mortgage lender makes ‘outrageous’ change to rules for borrowers – and it could increase payments
Customers could be forced to reduce their mortgage term. For advice on finding the best deals watch the video above.
ONE of the UK's biggest lenders has made a major change to its mortgage criteria which could mean higher monthly payments.
Halifax is reducing the maximum working age for applicable mortgage applicants from 75 to 70 years old.
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A maximum working age of 70 will apply to:
- Remortgage applications with any capital raising/additional borrowing
- Some purchase and remortgage applications because of the level of credit score achieved and overall credit profile.
The move could force thousands of borrowers to reduce the length of their current mortgage term, drastically increasing their monthly payments.
Most lenders only allow borrowers to take out a mortgage for as long as they intend to work.
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Halifax's decision to cut their applicable working age will now reduce the amount of time someone can borrow by five years.
It marks a major u-turn for the UK's biggest lender which only raised the maximum working age for mortgages to 75 in August last year.
Speaking to the Newspage news agency, Darryl Dhoffer, adviser at The Mortgage Expert, said: "This is outrageous. Halifax appears to be tightening the screws on the very borrowers who need them the most.
"Halifax is turning a blind eye to the struggles of average people.
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"High mortgage rates and shorter terms are a recipe for disaster, pushing even more borrowers into debt and hardship.
"They only recently extended the term to 75, so to now reduce it back down to 70 seems a bit odd.
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Many of the high street’s big lenders, including Nationwide and NatWest, already have a maximum age of 75.
But others, including Barclays, have a lower age of 70.
A spokesperson for Halifax Intermediaries said: "These changes have been made as part of a regular review of our lending criteria and will ensure we can continue to lend responsibly to a broad range of customers.
"For all other applications we will continue to use a maximum working age of 75."
The change will take effect from Monday, March 18.
How to get the best deal on your mortgage
IF you're looking for a traditional type of mortgage, getting the best rates depends entirely on what's available at any given time.
There are several ways to land the best deal.
Usually the larger the deposit you have the lower the rate you can get.
If you're remortgaging and your loan-to-value ratio (LTV) has changed, you'll get access to better rates than before.
Your LTV will go down if your outstanding mortgage is lower and/or your home's value is higher.
A change to your credit score or a better salary could also help you access better rates.
And if you're nearing the end of a fixed deal soon it's worth looking for new deals now.
You can lock in current deals sometimes up to six months before your current deal ends.
Leaving a fixed deal early will usually come with an early exit fee, so you want to avoid this extra cost.
But depending on the cost and how much you could save by switching versus sticking, it could be worth paying to leave the deal - but compare the costs first.
To find the best deal use a mortgage comparison tool to see what's available.
You can also go to a mortgage broker who can compare a much larger range of deals for you.
Some will charge an extra fee but there are plenty who give advice for free and get paid only on commission from the lender.
You'll also need to factor in fees for the mortgage, though some have no fees at all.
You can add the fee - sometimes more than £1,000 - to the cost of the mortgage, but be aware that means you'll pay interest on it and so will cost more in the long term.
You can use a mortgage calculator to see how much you could borrow.
Remember you'll have to pass the lender's strict eligibility criteria too, which will include affordability checks and looking at your credit file.
You may also need to provide documents such as utility bills, proof of benefits, your last three month's payslips, passports and bank statements.
What mortgage help is available?
As soon as you think you will have a problem with your monthly mortgage repayment - whether you can't pay anything, can't pay all of your monthly payments, or can't pay it on time - get in touch with your lender immediately.
They have certain schemes in place to help you if you're struggling.
Under the government's Mortgage Charter, you can temporarily ask to switch your mortgage to interest-only, or extend your term to bring monthly payments down.
You won't have to submit any further income details or share monthly spending commitments - you can just ask your lender to make the switch.
And it won't affect your credit score for six months if you choose to take up the offer.
If anyone using the temporary measures decides to return to their original plan within six months, they are free to do so.
Ask your lender about the breathing space scheme if you find payments unaffordable.
Under the breathing space scheme, no debts will earn interest, and no fees will be added for 60 days.
You'll be protected from debt collectors and bailiffs.
You may also be able to apply for a payment holiday - this is when you don't need to pay anything.
However, interest and charges may continue to be added, and missed payments will need to be made in the future.
Every company has a different policy, so you'll need to get in touch to find out what support is available to you.
Support for mortgage interest or SMI helps those on Universal Credit - and other benefits - by giving them a low-interest loan.
The help goes towards mortgage payments or loans taken out to help repair any damage to the home.
SMI is a loan that you will need to repay with interest when you sell your home.
You'll get help paying the interest on up to £200,000 of your loan or mortgage.
But you'll only get up to £100,000 if you get pension credit.
Many local councils have Welfare Assistance schemes to help struggling families.
Help available varies, but you could get free cash, food vouchers, and help for bills like rent and energy.
Check with your council to see whether you are eligible and what you can claim.
And, of course, it's always worth checking that you're entitled to all the benefits available.
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Entitledto's free calculator works out whether you qualify for various benefits, tax credits and Universal Credit.
Debt charity StepChange also has a benefits checker which is free to use and won't record your results.