Specialist
George Simpson Business Development Manager
WHY OLDER BORROWERS ARE REMORTGAGING OR MOVING There are now more mortgage choices than ever before for older borrowers planning the next phase of their lives. These provide solutions for an increasing number of situations needed by a population that is growing older. In the past there were barriers such as affordability restrictions or strict age limits when an older borrower was looking to move to a more suitable property or re-financing to pay off debts or raise capital. However, lenders have responded to the demands of the market and developed new products and criteria that better suit the changing market for lending in, and into, later life. If a customer is looking to remortgage they often do this to be able to fund another aspect to their life going forward, such as purchasing a second property or a Buy to Let, help a family member get on the housing ladder by providing all or part of their mortgage deposit, or consolidate any accrued debts and have a lump sum for home improvements to enjoy their retirement. Another key reason people want a new mortgage in later life is to purchase a house that’s more suitable for their retirement and better suits their anticipated lifestyle. For example, we recently had a case where an applicant aged 73 was looking for a mortgage to enable him to relocate back to the
SEPTEMBER 2020
area that he was originally from. He was looking to do this on the repayment basis and required a mortgage term of 20 years, taking him to age 93. He had sufficient pension income to support the loan required, which was below 70% LTV, and as Leek United have no maximum age1 we were able to provide the mortgage that he required. Lenders are continuing to improve their criteria to be able to help older borrowers who are either in retirement when the mortgage is taken out or will be retired when the mortgage term comes to an end. Pension income can also be taken into account by lenders when considering older borrowers, such as income from selfinvested personal pensions (SIPPs) and more favourable options where there is evidence of a pension being in place to help with future repayments. Age limits are also increasing and as long as the customers have suitable income projections more lenders will consider them. This market has been helped by house prices having risen in recent years, providing homeowners with some equity in their property that offers them more choice for a well-planned life in retirement. With the sharp rise in property value in recent years many have assets that provide good security for lending decisions to be made when considered alongside income. It looks like mortgages and remortgages for older borrowers will continue to be a key part of the market and will provide opportunities for intermediaries and lenders to further develop their business growth.
Each case is assessed on its own merits. Loan to Value (LTV) restrictions will apply based on age at the end of the mortgage term: In to retirement - 80% LTV. In Retirement - 70% LTV.
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