Halifax extends maximum working age for a mortgage: can it save you money?

The UK's largest lender has increased the age limit for which homeowners can repay their mortgage using income earned from working.

Halifax borrowers can now use their wages to pay off their home loan up until the age of 75. Previously, the age limit stood at 70.

Here, Which? looks at what this means for homeowners and the age limits on borrowing imposed by other major lenders.

Why has Halifax increased its maximum working age?

The extension is designed to help those borrowing later in life, or buyers who need to stretch out their repayment in order to make monthly bills more affordable.

It is available to both employed and self-employed customers, whether they be first-time buyers, homemovers or remortgagers.

Halifax says anyone taking out a mortgage until the working age of 75 'should be able to maintain their income position at the point of application to the end of the mortgage term and understand the risks if this proves not possible'.

Borrowers 'should consider if their occupation is sustainable, and the plausibility of working to their anticipated retirement age'. 

Those requesting a mortgage term that passes the working age of 70, will need to fill out a form confirming they have considered the implications. Continuing to pay off your mortgage in your 70s could impact your standard of living.

The increased working age is only available on capital repayment loans, not interest-only deals.

• Find out more: repayment mortgages explained

Long-awaited change 'will help homeowners'

Halifax's change of criteria brings the bank up to speed with many of the other leading lenders to have increased their working age limits in recent years.

Brokers and experts have hailed the long-awaited move. Craig Fish, director of Lodestone Mortgages & Protection, said: 'In this day and age, it is more common for people to work beyond state retirement age.

'People are coming onto 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 can only be a good thing.'

Ben Tadd, director of Lucra Mortgages, said: 'More and more borrowers 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.'

• Find out more: best mortgage lenders

How much could you save?

If you opt to stretch out your mortgage repayments until the working age of 75, your monthly bill will be significantly lower - but you'll be making repayments for much longer so you will pay more in interest.

We've crunched the numbers based on a 35-year-old taking out their first mortgage on a home worth £250,000 and paying a 10% deposit.

The table shows how the total paid for this 35-year-old compares against a range of mortgage terms. If they opt for the 40-year term and decide to pay off the mortgage up until they're 75, their monthly mortgage repayment is £371 cheaper but they'll pay back more than 2.4 times the value of the property over the term of the deal.

• Find out more: use our repayment calculator to see how different terms can impact your bill

Strong demand for longer-term mortgages

Despite costing significantly more in the long run, mortgages of more than 35 years in length are proving popular.

Borrowers are increasingly spreading their mortgages over a longer period to make things more affordable in the short term.

House-builder Taylor Wimpey says first-time buyer demand for 40-year mortgages has more than tripled since 2021. And for second-time buyers, 42% are taking out loans longer than 30 years, up from 28% in 2021. 

• Find out more: 40-year mortgages on the rise - what are the risks?

What's the maximum age limit on mortgages?

While lenders can impose a maximum working age for borrowers to repay their mortgage, this isn't necessarily the final cut-off.

Some lenders will base affordability on future retirement income. For instance, Halifax's working age limit is now 75 but its overall maximum age at the end of a mortgage term is 80. 

Lenders will also have different limits on their maximum mortgage term. 

The table below shows the maximum age limit and maximum mortgage terms offered by the 10 biggest lenders. 

Maximum age limits on mortgages are often set at either 75 or 80 years. So if you're 60, you might only be able to take out a standard mortgage with a term of 15 or 20 years

Meanwhile, some lenders allow borrowing to be paid over a 40-year term, while others will only allow 35 years or less. So a 25-year-old would only be able to borrow to the age of 60 or 65 even if the maximum age limit of a lender is higher.

• For more information on getting a mortgage when you're retired, check out our guide on retirement interest-only mortgages.

How to choose a mortgage term

If taking on a 35 or 40-year term is the only way you'll be able to get a mortgage right now, you'll have a decision to make over whether to save for longer or take the plunge.

If you do take out such a long-term deal, it can make sense to choose a loan that has no penalties for overpayments, so you have the flexibility to pay the loan back sooner if you can afford to.  To see how this could help your situation, check out our mortgage overpayment calculator. 

As a first port of call, consider speaking to a whole-of-market mortgage broker - that is, one who can look at every available deal rather than just working with a select panel of lenders.

• Find out more: how to choose a mortgage broker