The credit crunch forced lenders to revisit their mortgage policy
and, over the last few years, there have been some seismic changes to
the large mortgage industry in the UK. One of the major repercussions of
changes to lending policy and mortgage rules has been that there are
now far fewer mortgageoptions for older borrowers or those wanting to
borrow into their retirement.
Mortgage Strategy reports that older people are
facing a rapidly shrinking market as providers cut the maximum age on
their standard mortgage ranges. But, should lenders restrict high value
mortgage lending to older clients? And what options do you have
available if you’re an older person looking for a mortgage? We look at
the issues next.
Cuts in maximum age limits make it harder for older borrowers to get a mortgage
Before the global financial crisis, most banks and building societies
would lend up to the age of 85, making it relatively easy for borrowers
in their 60s and 70s to get a home loan. Today, however, the choice of
mortgage options has shrunk significantly with many lenders slashing
their maximum age to just 65 or 70.
Even in the last few months
lenders including the Skipton, Leeds and Newcastle building societies
have cut their maximum lending age to 75. But, have lenders gone too far
in restricting high value mortgage finance to older borrowers?
Is it time for lenders to change their policy towards older borrowers?
Mortgage Strategy’s recent poll found that 68 per cent of respondents
believed banks and building societies are too strict when it comes to
lending to the over 60s.
And, earlier this year, several high profile industry experts said that
lending into retirement must become easier. In a panel discussion in
early 2013, Sesame chief executive George Higginson said current
restrictions are ‘not right’ and failed to reflect the needs of a
workforce which is being asked to work for a larger proportion of life.
In his opinion it is not right to expect people to pay off their
mortgage before retirement. Hardly anyone will retire at 65, and many
will probably have to work into retirement. If that is the case now, the
nature of products available will also have to change and there need to
be new designs and products coming to the market in the near future.
Islay Robinson, CEO of London mortgage broker Enness Private Clients,
agrees that there are still lenders out there who will consider
approving a large mortgage for older clients but they are harder to
find. However, brokers such as Enness have access to a wide range of
lenders, many of whom have the underwriting flexibility to look at
individual cases on their merits and make a sensible lending decision.
The industry does need to take a hard look at the options for older
borrowers. If someone in their 60’s has guaranteed pension or investment
income and the ability to service a loan, why should they be treated
differently to someone much younger?
Mr Robinson, the London
mortgage adviser and million pound mortgage expert believes it has
become more difficult for older borrowers to secure a large mortgage.
Many High Street lenders have reduced their maximum age limit and it
means that older borrowers who want to save money by re-mortgaging or
who want to move home are finding that their options are very limited.