Building societies are set to review their maximum lending ages for mortgage borrowers, as more older homeowners are finding themselves unable to move or stuck on high mortgage rates. The Council of Mortgage Lenders also issued a report this week into the growing demand for borrowing in retirement.
These moves are timely, addressing a problem which has already becoming a real issue. Older borrowers are being penalised unnecessarily with lenders preferring to lend to first-time buyers than those with many years evidence of servicing a mortgage, simply because they are approaching retirement age. But it is not just those in their late fifties or early sixties who are struggling to get the mortgage they want – it can be a problem for those in their forties too.
Lenders must recognise that the ‘new norm’ will be later retirement ages as annuity rates are low and life expectancy increases. Property is the asset that will be increasingly called upon to bridge the shortfall and finding ways of doing this, which are fair and affordable, is essential.
When lenders are assessing mortgage applicants nearer retirement age they need to take more time to understand the other sources of income such as investment portfolios and different pension funds, which are more complicated than PAYE. It is essential that the question as to how the mortgage will be serviced and paid off is answered, but more time needs to be taken to look at all the options available to borrowers in their fifties.
There are some lenders who are already more sympathetic towards older borrowers. Get in touch for more information.