Posted on 24 February 2014 by
How old will you be when you retire? 65? Probably unlikely, especially if you are 30 or 40. 70? 75? Never?! Well, you may love your job (or work for yourself) or you might be in a position where you need to top up your pension. So if you are going to be working into your seventies, there is a fair chance that you will have a mortgage into your seventies too.
However if you have ever tried to obtain a mortgage over the age of 65 you will know just how hard it is, especially if you require interest only. The majority of High Street lenders will run a mile when a client approaching 70 requires secured lending, even if that client has been with that bank for a number of years.
In the last 12 months my colleagues and I have had an increasing number of calls from more mature clients looking for a mortgage and in almost every circumstance the customer will have been turned down by their current mortgage provider, and other main stream lenders before turning to a broker for help. Often these clients have very good cases – usually they have substantial equity in their property, with the loan to value less than 50%, income is generally from pensions, which are of course guaranteed and sometimes index linked (so far more secure than a salary) and usually the client has a very good credit rating. The only issue is their age.
But is this really an issue? The reluctance to lend to older borrowers is an attitude rooted in the past. With people living longer and working longer surely it is natural that mortgages will be taken out for longer periods as well. Especially on interest only, if there is a large amount of equity in the property. Often the clients most affected by this are those on an interest only mortgage which comes to an end. A lender will generally either switch the client to repayment a year or two before the end of the mortgage, pushing up payments enormously. Or regular letters start being sent saying that the client needs to pay off the mortgage in full by the end of the term. Often a client will have the means to pay the mortgage off, either with assets in the background or by downsizing. However they do not want to be pushed into redeeming the loan at that point – they want the time to make that decision when it suits them.
The High Street may be a wasteland in terms of finding lending into retirement, however at John Charcol we have access to a number of smaller, more bespoke banks and building societies who will take a view on older clients, and I personally have placed at least ten customers over the last 12 months with these lenders. And this figure is just going to grow judging by the number of calls we receive.
This should not be a niche area of lending bearing in mind the UK’s demographics; however it is, and for as long as it is you will need specialist help to arrange these mortgages. If you or someone in your family is struggling to find a solution for an older borrower please contact us, and we can point you in the right direction.
For more information enquire here or call: 0344 346 3672
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