Property investment can help you generate income or simply give you a place to live. While the average age of people who purchase homes in the UK is between 32 and 34 years old, many people wonder how early they can purchase a property.
You can buy property in the UK beginning at the age of 18. There may be a short delay of about a month before you can purchase a home once you turn 18. This is because of a slight delay in your credit showing that you are now an adult and have an adult bank account.
Let’s discuss buying property in the UK and how your age can affect eligibility. We’ll consider different scenarios for individuals who have recently reached legal age as well as those approaching retirement.
Does Age Affect Mortgage in the UK?
Buying property in the UK can be easier or more difficult, depending on your age. So, let’s talk about the rules that are already in place, then we will cover some additional challenges you may face based on your age.
Buying Property at a Young Age
Minors are not able to buy property until they turn 18. Instead, a trustee must own the property for the child until they become an adult, and the property can become theirs. During this period, the parents are responsible for payment and taxes on the property.
The parents of the child can purchase something called a bare trust, which allows them to hold ownership temporarily as a nominee. Once the child turns 18, the property will legally become theirs. At this point, they will be responsible for any payments or fees associated with the property.
It is important to know that bare trusts are not reversible. Once the child turns 18, property ownership will automatically transfer to them. It does not matter if the nominees change their minds about ownership. They will not be able to stop the property from becoming the child’s once they turn 18.
If you do not have a bare trust or other properties that can become yours when you turn 18, then you will need to buy it. There are some delays to consider when you turn 18 years old that can slow down the purchasing process. You must go through a credit check when you purchase a home.
The delay arises with the credit check. Credit companies can experience delays when it comes to updating their information. So, even though you are now 18 years old, some credit companies may not update your information to show you are an adult.
We recommend waiting about a month after you turn 18 before you apply to purchase a property. This should give the credit companies enough time to have the correct, up-to-date information needed to process your request. At times, this can take a little longer than a month to complete. So, try to be patient and allow creditors to catch up.
Maximum Age Limitations
While you need to be an adult to buy property in the UK, there are also age limitations on buying property. There is no set maximum age in the UK for purchasing a property. However, lenders may have rules as far as age and the length of the mortgage. It is important to ask questions and read through paperwork thoroughly to ensure you qualify.
People in the UK who are at retirement age may face struggles when it comes to finding a property to purchase. There are a few reasons for this. First, when you get older, you get closer to retirement age. As people retire, their income level changes. This is a concern for lenders as it may become more difficult to afford the property after retirement.
Lenders may also hesitate to allow older people to purchase property because there is a risk of sickness and even death. If this happens, the buyer will not likely continue making payments, and the lender will lose money.
For these reasons, lenders may be less likely to allow older people to purchase a property. However, this does not apply to every lender. While it may take some more time to find a property to buy, older people can still buy property no matter their age, as there are plenty of lenders who will sell to older people.
Finding the Right Lender
Whether you are trying to buy a property at a very young age or after retirement, you may face some skeptical lenders. Young people often do not have credit yet, which can be a major risk for lenders who are unsure if the buyer will take it seriously. As we discussed, lenders can also be hesitant to sell to older people as well.
The best thing you can do, no matter what age you are, is to take your time finding the right lender. Not all lenders are the same or have the same criteria. So, don’t let one or two lenders who choose not to work with you stop your search. Instead, remain vigilant in your search for a property to purchase.
There are quite a few lenders who prefer to focus more on credit history and a good deposit to consider the loan rather than age. If you are especially young or close to retirement age, we recommend finding lenders like this who will happily work with you no matter your age.
Tips on Buying a Property at a Young Age
When you turn 18 and can buy property, you may find this difficult because you have not yet established credit. So, lenders may feel it is a risk to allow you to buy a property at such a young age without a credit history. Thankfully, we have some tips to help you get approved to buy a property despite this.
If you are 18, your credit probably doesn’t even exist yet. You can’t get started building your credit until you become an adult. Even though you may be financially ready for a major purchase, your credit is probably lacking.
If this is the case, consider putting down a large deposit on the property. This will help lenders see how serious you are about owning the property. It will also indicate that you are able to afford mortgage payments.
Consider starting to save money for a deposit as early as you can. A significant deposit can help lenders see that you are serious about purchasing the property despite a lack of credit history.
Building Credit History
You won’t be able to start building credit until you are 18 years old. However, once you turn 18, you should start immediately. Consider getting a credit card and making regular payments to help build your credit immediately. Be careful not to overspend on your credit card or miss any payments, as this can have a major negative impact.
When you are just starting to build your credit history, small mistakes like late payments can cost you. Make sure you are careful during this time to only make decisions that benefit your credit if you want to buy a home soon.
If you are young and want to buy property, you may benefit from meeting with a mortgage advisor. Mortgage advisors can help you better understand your options when looking for property. Additionally, a mortgage advisor can help you better find lenders that are willing to work with you regarding loans at a young age or with limited credit.
Mortgage advisors know a lot about lenders. They can help you find ones that are more likely to work with younger buyers who may not have the best credit. The advisor will also give you an idea of how much of a deposit you should offer the lender to improve your chance of getting approved for the sale of the house.
One major alternative to purchasing a home alone at a young age is shared ownership. This can be a great alternative that allows you to build credit and enter a lease with another person to share the burden of paying for your property.
When you are in a shared ownership lease, you must live in the property while paying for it. So, this is not an option if you want to make passive income from letting out to other people. If you want more information about living in a purchased property, check out our article “Can I Live in My Investment Property?” which has some helpful information.
Shared ownership can allow you to build credit while living in and maintaining your property. This may not be ideal for everyone, but it can be a helpful alternative when there are few buying options out there.
Tips on Buying a Property When You Are Older
Now that we have covered some tips for purchasing a property when you are young, let’s talk about the opposite scenario: purchasing property when you are older. We’ll go over a few tips that’ll make it easier for you to purchase a house.
Have a Clear Retirement Plan
One of the main reasons that lenders hesitate to work with older people is their retirement. Once you retire, you will be on a fixed income. This income may be enough to cover your property expenses, but the change from a steady income to a fixed one can affect your ability to pay bills on time.
If you can show lenders that you have a clear retirement plan, you can increase your chances of buying property. It can be difficult to determine exactly how much you will have available post-retirement. However, showing that you have a plan to be able to afford the property when your income changes can make them more likely to work with you.
Buying property as an older person may involve increasing monthly payments to ensure you can pay the home off. Many lenders will want your loan paid off before you reach a certain age. For some, this is 70, 80, or even 100 years old. You may need to pay more monthly to fit in their limitations.
Offering or agreeing to increase monthly payments to speed up the ownership process can help your chances with lenders. Not only does this show them that you are willing to work within their time constraints, but it also demonstrates to the lender that you can be flexible in the amount you are willing to pay. This can help to show your ability to make payments every month.
Consider a guarantor if you still cannot find a lender that will work with you. A guarantor is another person that can sign an agreement along with you to take over the payments of the property if you are no longer able to.
In cases of older applicants, a guarantor would typically be a child or grandchild that has the ability to pay for the mortgage should you lose your income, become ill, or pass away. This is an added guarantee that the lender will receive payments on the property even if something happens and you cannot make the payments yourself.
So, consider having a guarantor sign with you to take over payments if you cannot make them for whatever reason. This can ease the most common concern among lenders—that something may happen with a change in income or health.
You have to be 18 years old to purchase property in the UK. Even when you reach 18, there may be some obstacles in the way of your attempt to purchase a property. Unfortunately, you can also face separate obstacles when purchasing property at an older age.
No matter your age, you will face challenges when purchasing a home. So, consider our tips for getting the property that you want, and don’t be afraid to consult with a mortgage advisor for further guidance. They can help you increase your odds of obtaining financing in many different scenarios.