Although there is no formal definition of later life lending, it is generally considered to be borrowers who are aged 55 plus.
Therefore later life mortgage products are aimed at those heading towards or are already in retirement, who are interested in releasing some of the equity in their home for a variety of different reasons.
Many banks will not lend beyond the age of 70. However, we have access to lenders who take a more pragmatic approach when lending to older borrowers. Bespoke lending may be available, where age is not the ultimate factor in the decision to lend.
Within the UK, lifestyles and healthcare are improving, resulting in a continual increase to life expectancy. As well as the population living longer and thus requiring mortgage products later in life, there is an increased pressure on older generations to support younger family members to get onto the property ladder. With the equity in their homes, older family members could be well-placed for this support.
Lenders are reacting to this by placing an increasing number of later life lending products on the market, to meet the demand of changing borrower profiles.
The types of products available will include traditional or conventional mortgages, where income drives the amount that a lender may lend. This will include income from pensions either in payment or due for payment, when retirement takes place. In addition, current earned income can be taken into account providing the lender is comfortable that this will continue. Other forms of income such as rental and investment returns, may also be considered.
In addition to this, there are lifetime mortgages (also known as equity release) where a borrower is able to take advantage of equity within the property. A lender will advance a portion of the properties value, dependant on factors such as age and health. Interest is charged and added to the balance (or rolled up) over the term. Then the loan is repaid on the sale of the property which may be at death, moving to long term care or of course downsizing.
Mr and Mrs M in their early 70’s, had an interest only mortgage with a term coming to an end. They had limited income from pensions and wished to remain in the current family home.
We were able to find a provider that was prepared to lend just under 50% of the property value, which released enough funding to repay the existing mortgage loan as well as some personal debt. This reduced monthly outgoings for Mr and Mrs M by nearly £1,600 per month and meant that they were able to stay in their current home.
Do you have a case suited to Later Life Lending?
Give us a brief outline of your client enquiry and we will come back to you quickly to let you know how we can help. If you would like to speak to us immediately, call us on 01708 676 123.