Can you be too old to get a mortgage? This topic has created quite a stir across the pond in the United Kingdom recently where new lending restrictions were implemented to curb high-risk lending. Lenders in the UK are reportedly denying mortgages to applicants in their late 30s and 40s primarily due to the fact that they would be paying off their mortgage into retirement with their old age pension as their primary income source.

What about age discrimination in Canada? In Canada, there is no age limit when applying for a mortgage. The basic qualifying criteria for a mortgage in Canada are the size of down payment, gross annual income, and general financial health. The maximum amortization period on CMHC insured mortgages is 25 years. We shouldn’t be all that surprised in this day and age that mortgages based on a 25-year amortization are now part of our retirement picture.

With this being said, in 2014, the Office of the Superintendent of Financial Institutions (OSFI) proposed changes to mortgage rules, taking a tougher approach to borrowers’ ability to repay, which is the fundamental requirement.

In addition to considering the borrower’s basic income and expenses—principal and interest, other sources of income, heating costs, property taxes, co-signor income, other monthly debt payments—lenders should look at other factors not normally considered. These include the borrower’s assets and other living expenses. Additionally, lenders should consider “to the extent possible” the stability of the borrower’s income, including “possible negative outcomes,” meaning variability in the person’s salary or wages, taking a drop from salary to old age pension into account.

My advice to borrowers is to aim to pay off your mortgage by age 50-55 so you can ramp up your savings for 10-15 years before you retire. If you know that you will still be working after the age of 65 and still earning an employment income, you can stretch it by a further few years.