There is a growing pressure on mortgage lenders to offer loans to older borrowers, who struggle to find products suiting their requirements when they purchase a house, or extend a mortgage.
Usually, lenders will require borrowers to repay their loan by the time they are 70 or 75 years old, after rules on affordability were tightened in April 2014.
This ‘limit’ consequently means those who are coming up to their 50s may be refused 25-year mortgages, irrelevant of their ability to repay.
However, a combination of factors are causing the major lenders to address the issue. A rising state pension age, increased life expectancies and graduates delaying taking out mortgages as they pay off their debts, are all reasons which are being used to encourage lenders to help older borrowers more.
“It’s inevitable that lenders will have to bow to public demand and sort out how they’re going to lend to older borrowers,” said Andrew Montlake, of broker Coreco. Coreco has often been approached by those aged between 55 and 60 years, who wanted to take out a mortgage, or extend their existing one.
However, the problem will not be fixed quickly, with David Hollingworth of London and Country Mortgages saying: “If you’re going to be repossessing an elderly borrower, that’s never going to look good.”
This therefore means lenders may look to offer different mortgage products, such as offering traditional mortgages which can change to lifetime mortgages, which is when the remaining debt owed is repaid when the house is sold.
