In removing the upper age restriction across its mortgage range, Dudley Building Society is the latest lender to make life easier for older clients. The building society says that older borrowers are no more risky than younger ones providing that underwriting is carried out by humans, rather than computers. This is a refreshing development and a welcome approach to credit, treating each application on a case-by-case basis.
On the whole, building societies are better at lending to older borrowers than high-street banks, although the challenger banks are looking to make headway in this market.
National Counties Building Society, for example, will lend to borrowers over 90-years-old if they can demonstrate that they can afford the mortgage. It will also allow several applicants on the application, so younger people can use their income to help out parents if required or vice versa.
Furness and Harpenden building societies also look favourably on older borrowers. Critically, Metro Bank has now started lending to older borrowers where income is guaranteed, such as a good final salary pension or rental income. Metro entering the market is significant, as it offers these deals at market-leading rates, whereas the smaller building societies may charge a premium on the rate.
These deals often have to be interest only, due to the short terms, so a credible repayment strategy is essential.
Other mainstream lenders such as Santander, Barclays and Halifax won’t consider older borrowers because their lending books are already full of interest-only loans, many of which may have no credible repayment strategy. Therefore, there is less appetite to help out this demographic of borrower.
We are also seeing an increase in the numbers taking up equity release, which can, if advised correctly, be a really useful product, allowing borrowers access to funds in their properties to live out their days more comfortably.
If the borrower is significantly wealthy, private banks are also happy to lend, even if they are nearing retirement or have actually retired.