You could argue that there is a greater demand than ever before for what is being referred to as “Later Life Borrowing.” Quite simply, this is due to the ageing UK population with more and more people seeking mortgage products that will last well into retirement. Some lenders seem to have taken notice of this demand with a string of new products set to be released which are aimed at older borrowers.
Traditionally, the mainstream lenders have offered a cut-off age of around 70-75 years for retirement mortgages but in the modern era, this is simply not as viable as it used to be due to a number of key factors. Rising house prices, student debt and the age at which couples are having children have all contributed to the demand for products that will suit those who are buying properties later in life.
Another key factor is that people are simply working longer and this can relate to why an older person may wish to remortgage or take on a new deal after years of being mortgage-free. An example might be someone wishing to release equity from their home for the benefit of their children or grandchildren or to simply finance a better quality of life.
Challenger bank Aldermore has recently announced plans to let their customers carry on holding one of their products until they are 99 years of age. Furthermore, the lender will offer a new maximum age for new applications for a home loan up to the age of 85 which to us is pretty impressive when you consider that most banks will lend up to a maximum age of 75.
Nationwide have also unveiled plans to launch an interest-only mortgage for older borrowers. We uncovered this information in the company’s annual report and it would seem that the bank is offering this new product as a way to combat their net lending and profits which have both tumbled for the year.
This is certainly an interesting development and we can certainly see more UK lenders offering retirement products should the Aldermore and Nationwide products prove popular. What cannot be denied is that the house buying journey has changed considerably over the years and lenders are having to innovate more than ever to develop products that will enjoy a successful uptake on the modern marketplace.
Of course, there are potential pitfalls for retirement mortgages as well and these generally relate to people’s health and pensions. Further complications could arise when you consider joint applications and what if someone agrees to sell their property and then change their mind at a later date? Nonetheless, we will certainly be keeping an eye on this development and will bring you more news as we get it!