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Lending into later life

Written by Ipswich Building Society

19 Jun 2018

Tags

Later life, Mortgages after retirement, Older borrowers, Retired

4 min read

By 2034 it is estimated that 24% of the population will be over 65 – and as the average age of a first time buyer hits 30, that means many more borrowers potentially carrying their mortgages into retirement.

An ageing society

The demographics of the UK are changing – and fast. By 2034 it is estimated that 24% of the population will be over 65 – and as the average age of a first time buyer hits 30, that means many more borrowers potentially carrying their mortgages into retirement. There are of course many reasons why people borrow into retirement; perhaps to fund home improvements or holidays, or to help their children and grandchildren onto the property ladder.

However, things are not so simple for older borrowers looking to access the mortgage market. In 2014, some lenders responded to the Mortgage Market Review (MMR) by tightening their affordability criteria, particularly around older borrowers, making it more difficult for them to get a mortgage – some were deemed simply ‘too old’. This coupled with recent pensions reforms and changes to the state retirement age means that some older borrowers have had a pretty grim ride over the last few years.

The same rules means that someone looking to buy their first home at 40 years old might have difficulty getting a mortgage with a 30-year term, as this would take them past state retirement age. There is, however, some light at the end of the tunnel.

How lenders are helping borrowers into later life

In response to growing demand for more flexibility in this area, many lenders raised their maximum age limits, a welcome step in the right direction. At Ipswich Building Society we’ve gone one step further and completely removed all upper age limits from our mortgage range. This is already a growing trend among some building societies.

We’ve paid special attention to helping borrowers in later life through our manual underwriting process. We can look at each application individually, taking the applicant’s own personal circumstances into account. And what’s more, we can also accept 100% of pension income when assessing affordability.

But we haven’t stopped there. Furthering our commitment to older borrowers, we’re now offering three later life mortgage products aimed at this group, with both fixed and discount options and varying term lengths to choose from, granting further flexibility to those wishing to borrow into later life.

All of these products are available to borrowers aged 50 or over (for joint applications, one applicant must be 50 or over).

For more information on our products for older borrowers click here, or read more about our proposition and how we’re helping people borrow later into life.


Sources:
1 Office for National Statistics
https://www.ons.gov.uk/peoplepopulationandcommunity/populationandmigration/populationestimates/articles/overviewoftheukpopulation/july2017
2 Independent
https://www.independent.co.uk/property/first-time-buyer-age-increase-1960s-housing-market-cost-property-ladder-a8244501.html 
3 Pensions Advisory Service
https://www.pensionsadvisoryservice.org.uk/about-pensions/pension-reform/pensions-act-2014 
4 Homewise
https://www.homewise.co.uk/blog/interest-only-mortgages-and-older-borrower/
5 The Guardian
https://www.theguardian.com/money/2016/oct/17/mortgage-lenders-lift-upper-age-limits-solve-problem

This article was published under our previous name of Ipswich Building Society. We changed our name in 2021 – find out more.

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