Lending Into Retirement – Don’t assume age is a barrier

Lending Into Retirement – Don’t assume age is a barrier

11:41 AM, 27th October 2016, About 6 years ago 3

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I think it’s fair to say that the general consensus amongst mortgage professionals is that lenders still aren’t doing enough for older borrowers. At first glance you might look at most lenders looking to lend until age 80 as being quite accommodating, but as we start to work longer, live longer and need to borrow longer, this limit is becoming more and more of a problem.snipped retirement

The Building Societies Association in Nov 2015 reported the following:

In 2014 there were 11.6 million people over the age of 65. Twenty years on this figure is, at a conservative estimate, projected to rise to 17.3 million. Amongst this group will be a substantial number of borrowers who are today’s first time buyers – already one in four people borrowing beyond the age of 65 is a first time buyer.

Looking at the statistics in a different way, lending to borrowers who will be over the age of 65 when they repay their mortgage accounted for 35% of total lending at the end of 2014. These ‘successes’ are counterbalanced by regular press stories about individuals in their early 40’s who report that they can’t borrow with a term that makes the loan they need affordable.

At a time when the so called “High Street” Banks are to a degree just stagnating on this issue it is good to report that the smaller Building Societies and New Lenders to the market are now seeing the potential that this particular sector has.

There is still an enormous amount of work to be done, but with some Building Societies looking up to age 85 or having no upper age limit at all, this is good news for many. In my experience there still exists a degree of apathy towards those that need it, even trying to find a solution. There is almost a resigned acceptance that something can’t be done rather than making enquiries and investigating the possibilities. In other words the potential clients are saddled with a preconception that borrowing into retirement or old age just isn’t possible. That needs to change.

I guess that there has always been a tendency in banking to ignore “those of a certain age” and assume that their only requirement will be to save. This often inaccurate assumption could mean they are perceived as worth less in terms of income to the institution and then treated differently. This is of course rubbish.

The more we approach lenders with strong proposals for this type of client the greater the chance that more lenders will take a positive attitude in the future. That will increase the availability of facilities and the competition it creates can only have a positive impact on rates.

What I am trying to do is dispel the myth that you will always be told “you’re too old to get a mortgage” once you reach 40 or 50 years of age. There are very likely to be options available to you. That doesn’t mean that every option available is right for you or that there will always be something available. There are however clients who are in their 20`s or 30`s who may for a number of reasons find it harder to get a mortgage than someone in their 50`s. Don’t assume when you could KNOW.

The bottom line is you simply do not know what is available until you take the time to explore the options.  If there is a lender out there we believe we will find them.

If you are considering a mortgage into retirement and want someone to advise you then please complete the contact form below.

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by Ed Atkinson

13:57 PM, 19th November 2016, About 6 years ago

One option we are considering for the future is to hold onto our properties and so avoid CGT and leave it to the IT to give HMRC their cut. This would be foolhardy unless we kept up on the borrowing and gave plenty of cash gifts to the beneficiaries of our wills. But it needs to be quite high borrowing to eliminate the differential between the 40% IT rate and 28% CGT marginal rate.

This is all rather academic at the moment, I'm in my mid 50s and we have some great lifetime trackers that will last to about 2029. Selling or giving the properties will mean relinquishing these great trackers. So I guess my question is what the market will be like in 2030 for re-mortgaging to people at about 70? Any thoughts as you gaze into your crystal ball?

by Mark Alefounder

9:56 AM, 20th November 2016, About 6 years ago

Reply to the comment left by "Ed Atkinson" at "19/11/2016 - 13:57":

As everyone starts to live longer I think lenders will adapt their policy and make facilities available for longer. That’s what we have seen in recent years and it would seem unlikely that this will change.

by Ed Atkinson

11:20 AM, 20th November 2016, About 6 years ago

Reply to the comment left by "Mark Alefounder" at "20/11/2016 - 09:56":

Thanks Mark. Appreciated. It makes sense to see it that way.

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