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Banishing the later life lending stigmas – The Loughborough for Intermediaries

by: Ashley Pearson, national BDM at The Loughborough for Intermediaries
  • 04/07/2022
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Banishing the later life lending stigmas – The Loughborough for Intermediaries
One of the most common misconceptions surrounding the mortgage market is that getting a mortgage in your 60s, 70s and 80s is almost impossible.

Yet soaring house prices, longer term mortgages and the rising cost of living means many people take their first step onto the property ladder later in life, and therefore enter their 60s and 70s still repaying the debt.  

People are also living and working longer than ever before and the traditional concept of retiring at 65 years old is no longer the norm. Instead, some people are continuing to work for as long as they can while still paying a mortgage, and others may take on part-time roles to maintain a regular income or take on voluntary work in order to keep busy.  

For those looking to borrow later in life, there are a host of reasons why someone in or approaching retirement would choose to take out a mortgage. For some cases, the family home may have become too large and difficult to maintain, so taking out a mortgage to downsize to a smaller property before the main family home is sold could be a preferred option.  

Others may decide to move closer to children and grandchildren living in a more expensive area of the country and need a mortgage to cover the cost of the move. For those who decide to borrow money for home improvements, taking out a mortgage on the property that is currently owned outright or moving a mortgage to a different lender and borrowing more to cover the cost of renovations is also possible.  

Similarly, buying a new car, caravan or going on an extended holiday, paying for care home fees or helping family members with financial commitments such as school fees or a deposit for a house are all common reasons to borrow money in later life.  


Suitability is always considered 

Obviously, there are a number of factors that will decide whether a person can borrow into retirement, but these are no different to the standard affordability measures often used when calculating a borrower’s suitability for a loan.  

Factors such as the amount being borrowed, the length of the mortgage term, the size of the deposit, and how much the borrower can afford to pay each month are all key factors. The age at which the borrower wishes to retire will also play a role.  

Even if a borrower decides to retire during the term of the mortgage, the ability to pay now and in the future will be taken into account using current income or projections of the income they’ll have in retirement. Pension income, self-employed income, employed income and investment income can all be used to calculate affordability, and a combination of all can also be considered.  

Loans for those taking out a mortgage that will follow them into retirement range from £25,000 to £500,000 and are subject to the loan equaling no more than 60 per cent of the valuation or purchase price of the property.  

Brokers with older clients wishing to borrow money should ensure they contact a lender familiar with the process who can assess each application on its individual merits.  

For many people, retirement is a process and does not always mean stopping work completely. This means that borrowing past what is traditionally deemed “retirement age” is not only becoming more acceptable, but also more commonplace. 

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