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LENDING INTO RETIREMENT: WHY THE SPECIALIST MARKET IS TAKING THE LEAD

By Chris Bramham

As a nation we are working and living for longer and, as a result, we are seeing more and more lenders considering a borrower’s mortgage needs beyond the standard retirement age. In fact, some lenders are becoming much more relaxed around lending into retirement and are looking to extend the upper age limits.

In reality, some borrowers aged 55 have struggled to get long term loans when they are working and retiring later, and this is why the specialist market has real options for the older borrower who should not be at a disadvantage due to their age. Although the high street isn’t catering for this particular group of people, an increasing number of mortgage lenders are considering 25 to 30 year terms for 70 and even 80 year olds for buy-to- let, while other borrowers think about taking pension income into retirement which gives them a longer term.

In my opinion, it is clearly an underserved part of the borrowers’ community and because we are working and living longer, we need finance for longer. Although the regulator should do even more to support more flexible lending into retirement, I think the specialist lending market has taken the lead and have been the first to innovate, although it is uncertain whether or not the high street will take a similar approach by loosening their lending into retirement criteria.

However, some of the newer entrants that are due to launch have included options for older borrowers and are using this element of their criteria as one of their USPs. As an ageing population, our requirements are diversifying, so lenders must have the desire and drive to increase their product offering and do more to satisfy the needs of older borrowers who have such limited borrowing options from the high street.

Interestingly, the CML recently said that more should be done to assist advisers in offering clients a broad range of at-retirement options through a later life lending regulatory reform. Lenders should accept that people are retiring later and are earning income for much longer periods of time.

However, it is positive that more attention is being paid to older borrowers who have previously struggled to get a mortgage, with many banks and building societies only granting a loan up to an individual’s planned retirement date. It is therefore time that more lenders reviewed their service offering, particularly when the UK already has almost 12 million over 65s, and mortgage enquiries from the mature borrower market is on the rise.