Older Mortgages Are on The Rise
With people living longer in the United Kingdom, it is no surprise there is a rising demand for mortgages which suit people’s lives. In data provide by Money facts, it appears homeowners who are looking to borrow money into their 80s want greater choice, and the market is responding.
In 2015, there wasn’t a mortgage which allowed borrowers to repay their debt between the ages of 80 and 84 years old. However, with the growing demand for this service, and lenders reacting to commercial pressure, there are now more than 1,000 options for borrowers to choose from.
Lenders needed to limit their mortgage offerings
It is easy to see why lenders limited mortgage options and the availability of borrowing. It wasn’t just people looking to borrow at an older age who were limited, and it was people from all backgrounds. In response to strict criteria imposed to restrict risky lending, many banks and mortgage lenders reduced the number of mortgages which were available to people who were aged 65 or older.
Even people who had pensionable income struggled to convince banks to offer them a loan into their 70s. However, this is no longer the case, and in the present day, there are only 18 mortgage offers which have a maximum age restriction between 65 and 69 years old. In 2014, there were more than 900mortgage deals with this criterion.
Darren Cook, a finance expert at Moneyfacts[¹], says: “Over the past five years, mortgage providers have become far more accommodating to borrowers who wish, or may have no alternative but to extend their mortgage term well past the official pension age.”
Darren continued by saying; “The scaling back of strict criteria around the maximum age at the end of a mortgage must be a welcome relief for those borrowers who may have reached the end of their mortgage at 65 on an interest-only mortgage and have had few options available to turn to.”
People want more mortgage options
While banks remain conservative, it appears the change in outlook is being driven by building societies. Eight building societies are willing to provide mortgages to lenders who will be 85 years old after the mortgage term. Some societies don’t have an upper age limit, and who instead impose a maximum term on their mortgage offers. As an example, the Ipswich Building Society provides a 40-year term mortgage.
Taking this to its natural conclusion, a mortgage applicant at the age of 60 years old could receive a mortgage they wouldn’t pay off until they were 100 years old.
With more people enjoying a good standard of living for longer, it is natural mortgage products will evolve to meet the needs of these clients. The pension age is under review[²], and people may be expected to work to an older age before they can enjoy their retirement.
Xpress Mortgages has a team of mortgage experts who are happy to help, so please get in touch.