Research reveals significant rise in mortgage products for older home owners
The number of mortgages available for older home owners in the UK has increased significantly and likely due to the fact that the pension age has changed.
There are also new products that allow borrowing up to the age of 80 and over, according to new research from Moneyfacts.
In 2014 some 52% of mortgage products were available to home owners aged up to 75 but now that has increased to 72% while there are 1,079 products for up to the age of 80 and over, up from none five years ago.
‘Mortgage providers have become far more accommodating to borrowers who wish, or may have no alternative but to extend their mortgage term well past the official pension age,’ said Darren Cook, finance expert at Moneyfacts,.
He explained that mortgages for older borrowers fell in the aftermath of the 2007/2008 financial crisis as lenders introduced stricter criteria and reduced the number of interest only loans available as well as lowering the maximum age at the end of the term.
‘The scaling back of strict criteria around the maximum age at the end of a mortgage must be a welcome relief for those borrowers who may have reached the end of their mortgage at 65 on an interest-only mortgage and have had few options available to turn to,’ he added.
He also pointed out that the scrapping of the default retirement age in 2011 now means that the official pension age and retirement age are no longer one and the same and employees can choose to work beyond the pension age for reasons other than financial need.
‘Reasons to extend a mortgage past pension age may include releasing cash from their equity or purchasing a retirement property,’ he added.
Even High Street lenders are now offering loans to older owners and not just specialist lenders. For example, the Halifax will lend up to age 80, while the Nationwide Building Society will go as high as 85.
Moneyfacts says, however, that it is some of the smaller lenders in the market who are leading the way and they often have a more flexible approach, assessing applications on a case by case basis. The Family Building Society, Hodge and Aldermore will all lend into a borrower’s 90s, for example.
Some lenders offer retirement interest only mortgages. However, people who are retired need to provide evidence that they can afford monthly payments. Some products even remove the need for a formal end date with the mortgage repayable on sale, death or after moving into long term care.