Age is just a number - except when it comes to mortgages
‘Older borrower mortgages’, ‘later life mortgages, or ‘over 50s mortgages. It seems the market doesn't have a common term for mortgages aimed at people who want or need a mortgage over a certain age. A quick Google search highlights the disparity in the terms being applied.
Historically, it was always the goal for homeowners to clear their mortgage as early as possible, and certainly before retiring. Perish the thought someone might have outstanding mortgage debt whilst also in receipt of a pension! This meant many banks and building societies were unaccustomed to dealing with people at this time of life.
Whatever you want to call mortgages for people at this life stage, it’s my belief that mortgage choice should not be limited to younger people. We give older borrowers access to the whole of our product range. Simply put, if an applicant of any age meets our criteria at Suffolk Building Society, and fits affordability, they can borrow from us. If they don’t, they can’t.
A lack of choice stifles competition, so lenders who restrict access to their mainstream products are often doing older borrowers a disservice, not a favour!
The older the borrower, potentially the more complex the case
Gone are the days of a single employer for life and one defined benefit pension - although I can only assume this meant much less paperwork for those in our industry! Therefore, during my time at Suffolk Building Society, I’ve been keen to ensure our criteria keeps pace with what our borrowers’ income looks like, be that in mid-life, through and beyond retirement, into older age.
Some people may be compelled to stop working and rely on their pension and savings, due to ill-health, caring responsibilities or simply because they can afford to do so. But we also know that many won't have a hard stop. Some will go part-time, some will become consultants or non-execs, or start a totally new career. Others may take a less pressurised role for the social benefits as well as the income. In fact, older people may have multiple sources of income and it is important that, as lenders, we recognise these varied sources when considering affordability.
At Suffolk Building Society, we take this one stage further and acknowledge that income in retirement can be much more stable than a salary. That’s why we will use state and private pensions, SIPPs, annuities, and drawdowns in our affordability calculations.
We know there are a greater number of reasons for needing a mortgage at this age than ever before.
They might include:
● deciding to prepare a different house for older age and reduced mobility
● adapting a property for disability
● gifting deposits to offspring
Recommended by LinkedIn
● divorcing
● freeing up funds for leisure purposes or health reasons
● moving to be near family
● taking on a self build project
● and downsizing.
I’m proud to work for a lender which understands that moving house, or remortgaging, after a certain age isn’t just about downsizing - we understand that it’s nuanced and that several factors could simultaneously be at play.
Real choice, not a Hobson’s choice
As the circumstances of older borrowers vary so much it seems counterintuitive to restrict their borrowing options. If anything, this group, diverse in their finances, outlook, health and needs, should be offered greater choice, not less. People in their 50s, 60s, 70s and beyond are just as capable of servicing a mortgage as younger people. In fact, in many cases, they represent a lower risk.
Our practice of manual underwriting also allows us to review each application on its merit. This means we really get to know borrowers' individual circumstances, which for older borrowers is absolutely crucial.
Ageing can, at times, be challenging but I firmly believe that getting a mortgage at any age should not be!
If you have any questions about our lending criteria for older borrowers or have a specific case you are looking to place, please get in touch.