A mortgage until you’re 80? – new lender MoCo to offer later life loans

Most lenders have credit policies that mean they want the mortgage paid off by the time the homeowner reaches the age of 70.

MoCo, which is owned by Austrian bank Bawag, is expected to add some much-needed competition in the home-loans market here, which is dominated by AIB and Bank of Ireland.

It insisted it is acting prudently in offering mortgages to older borrowers.

Last month it launched its first home loans in this market, including a five-year fixed rate, starting from 4.5pc, which is lower than the main banks.

But its move to issue lending criteria to brokers that permits mortgage terms that will mean some borrowers still paying off the loan up to the age of 80 has raised eyebrows.

Its credit policy states: “Max term of up to 35 years. Max terms to applicant age of 80.”

Adviser Mark Coan of online finance guide MoneySherpa.ie said there is increasing demand for mortgage terms that run later in life due to people buying houses later in life and people living for longer.

“Lenders have responded to this shift by lifting the hard age cut-offs previously in place, moving Ireland more into line with the approach seen in other markets,” Mr Coan said.

“However, this doesn’t mean open season for later-life mortgages. Older applicants still have to show they have the ability to repay for the whole mortgage term.”

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If the term runs past the typical pension age, this usually means showing that the applicant’s pension arrangements are sufficient to cover repayments, Mr Coan said.

Asked if it was not irresponsible to let people pay a mortgage until the age of 80, long after the official retirement age, a spokesperson for MoCo said: ­“MoCo’s credit policy provides for a maximum age of 80 at the end of the mortgage term.

“Where a borrower is expected to be in retirement during any part of the mortgage term, an enhanced individual assessment will be carried out, with a prudent approach taken in relation to ongoing income and affordability in retirement, including review of ­documentation from the borrower’s qualified financial advisor where applicable.”

Last year, Leitrim-based Avant Money was ordered to pay more than €8,000 to a man whose broker said he could not apply for a mortgage switch with the financial institution because he was over 70.

The Workplace Relations ­Commission was told that when the man complained directly to the lender about the refusal, its head of mortgage operations told him its policy “does not extend to offering a mortgage to applicants over 70” and that was its “final response”.

The tribunal upheld Michael Lane’s complaint of ageist discrimination ­under the Equal Status Act 2000 against Avantcard DAC, trading as Avant Money.

Meanwhile, Avant Money has not commented on a broker update it sent out that states single mortgage applicants must have an income of at least €80,000.

It is understood the lender has advised brokers that it will now be applying a stronger criteria when reviewing applications where all of the following apply: the application is for a higher loan to value, an income of less than €80,000, and where net disposable income is below a reasonable threshold.