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Rise of ‘the silver borrowers’

2nd December 2019

A silver-haired octogenarian roaring down the driveway of their new luxury bungalow in a Lamborghini on the way to the gym sounds an unlikely scenario

But it’s a fanciful visual metaphor for the ways in which our society is changing – and with it the mortgage market.

An ageing population, higher property prices, a shortage of housing stock and new pension freedoms…all have played a part in irrevocably reshaping the industry.

If we then factor in the increasing age of first-time buyers, and the fact that many people now opt for a ‘phased retirement’ rather than finishing work in their mid-60s, the very idea of still paying a mortgage at the age of 85 – virtually inconceivable 20 years ago – begins to sound almost the norm…

The industry is experiencing the beginning of a wave of ‘new’ borrowers coming through, with lenders now becoming more inclined to lend over a person’s ‘life period’.

Here at Leek United, we have looked to adapt to the borrowing needs of an ageing population, and our full range of mortgage products are available to older borrowers as we have no maximum age limit.

Why ‘later life lending’?

‘Later life lending’ – or, to be more accurate, ‘later life borrowers’ – can be broken down into two basic categories:

Firstly, there are those who simply want to borrow past what has always been regarded as the typical retirement age of 67. For example, they may wish to buy a home at the age of 60 on a 25-year term.

Also, there are those living in a bigger property, looking to move or downsize and take out a mortgage to enable them to provide the equity for their children to buy a place of THEIR own.

Then, there are the borrowers who wish to release equity from their homes, in order to free up money to fund their retirement lifestyle or to pay off a shortfall in their existing mortgage.

As tempting as the prospect of a potentially sizeable amount of ready cash might be, equity release, in particular – whilst becoming increasingly popular – is an option that should only be entered into with proper financial advice.

There’s no getting away from the fact that getting a mortgage can be more difficult the closer you get to retirement – and especially if you’re already retired or semi-retired.

So, if you’re already retired or semi-retired and considering getting a mortgage, here are a few points worth considering…

Why do you need a new mortgage?

Your mortgage product has come to an end – so you may be looking to get a better deal on your current mortgage. Or, you might be moving to a new property – downsizing to somewhere smaller, for example…

Are you a credit to your own finances?

You will always have a better chance of being accepted for a mortgage if you have a strong credit history AND only if your income is sufficient to comfortably cover the repayments.

Older borrowers may use their income in retirement as a means of making their interest monthly payments, their property may be of a certain value and its sale will cover the repayment at the end of the mortgage term.

Many, particularly those on a reduced income following retirement – prefer the ‘interest only’ option.     

Taking a reasonable view…

As a Building Society, Leek United looks at the overall ‘reasonableness’ of a person’s individual circumstances and – unlike some lenders – we don’t have an upper age limit on mortgages.

Five years ago, there wasn’t a single mortgage product that allowed borrowers to have a mortgage into their ‘later years’; today – following a sharp increase in demand from older borrowers – there is an ever-increasing choice of products to take them well beyond retirement.

Irrespective of the reasons for that upward trend, there is – and will continue to be – a real demand for products for older borrowers. That’s something our industry has to be ready for.

We do consider each application on an individual basis – so if you are older and wiser and require a mortgage term up to retirement or beyond, please call us on: 0808 169 6680

To find out more about our full range of mortgage options, click here

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

Image by robertkneschke/Shutterstock.com 

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