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As a follow up to our recent article on getting a mortgage over the age of 65 – and not forgetting our feature in the Telegraph – it seems that mortgages for older clients remain extremely topical. Following these issues, it has been reported that the majority of building societies will be reviewing their mortgage lending age limits in response to increasing demand for long term borrowing.
With lenders now promising to re-evaluate restrictive criteria, many pensioners will be able to help their children and grandchildren onto the property ladder. Since new lending rules were introduced last year, older customers have struggled to get a mortgage on a flexible deal – despite having large deposits and equity or secure income. Even borrowers as young as 40, who intend to work until their 70s, have been locked out of the market or restricted to a more costly shorter mortgage term.
Combined with the fact that the average first time buyer is now 30 (a figure expected to keep on rising), a lack of flexibility with such cases is a common and present issue. Most lenders currently have a maximum age of 70 to 75 for a home loan to be paid off. Yet in practice, many will not lend beyond a borrower’s state pension.
With up to 30 building societies thought to be discarding mortgage lending age limits, many will solely focus on customer wealth to determine whether a client can take on debt. By lending on the basis of risk rather than age caps, new offers could last customers’ to their 80s or 90s; meeting inevitable growth in demand for retirement borrowing in an ageing population.
Older people are living different and longer lives now, with varied circumstances such as divorce requiring more financial options. Lenders are therefore looking to provide greater flexibility, especially as increasing house prices make it harder to achieve home ownership.
With building societies looking to use different criteria to approve loans, including pension wealth and insurance cover, more people will have the ability to withdraw equity from their homes or extend a term later into retirement. These more flexible deals will also allow repayments past the age of 75: a more realistic solution for high net worth clients looking to build a home for retirement, or help young families buy a home.
These latest proposals follow measures set out by a Building Societies Association report, which stated that although its members already held more flexible criteria than high street banks, borrowing into retirement is no longer a niche form of lending.
Many lenders will currently grant a mortgage up to an individual’s planned retirement date, however by 2034 it is believed that people aged 65 plus will account for a quarter of the population. With rising house prices and an increasing percentage working past the state pension age, many are now in need of longer repayment terms.
Whilst we anticipate changes to fall into place, we are here to help you with any financial advice you need. With a wealth of contacts across the market, we are confident in our ability to find the best solution for any client – especially with more specialist cases. As borrowing into retirement becomes increasingly commonplace, we can help you get in touch with the right lender and find the best deal for you. We also offer wealth management and insurance services, so you can ensure every aspect of your mortgage is taken care of correctly and securely.
If you would like any more information, or simply wish to chat to one of our expert brokers to discuss your circumstances further, feel free to get in touch with us anytime.