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Lifetime mortgages and the age 50-plus purchase market: Fit for purpose? – Davidson

Lifetime mortgages and the age 50-plus purchase market: Fit for purpose? – Davidson

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Posted:
June 16, 2025
Updated:
June 16, 2025

Over the past 10 years, I think we can all agree, the age 50-plus mortgage market has moved on dramatically.

Where equity release was once a niche option, we now see a far wider conversation around how older homeowners can use their property wealth, whether to help family, support their lifestyle, or simply move somewhere new. That shift has brought growth, innovation, and broader appeal. It’s also raised a question that’s becoming harder to ignore: are lifetime mortgages actually working in the purchase market?

As more homeowners approach retirement with plans that don’t involve downsizing, we’re seeing gaps appear between what clients need and what lenders can offer. The desire to move home later in life, often to a more expensive property, is no longer unusual. Yet some lenders seem to have built their lifetime mortgage purchase offerings around an outdated assumption: that everyone will be trading down.

The result is confusion, complexity and outcomes that don’t always serve the customer well.

One of our mortgage advisers recently shared a case that brought the issue into sharp focus. A couple with a £25,000 lifetime mortgage were selling their home for £240,000 and buying a new property for £285,000. Once all the fees were accounted for, they needed an extra £65,000. The plan was simple. Keep their current lender, port the lifetime mortgage and borrow the top-up.

It should’ve been straightforward. It wasn’t.

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The lender’s porting policy clearly hadn’t been designed with this kind of situation in mind. It only seemed to allow for downsizing. The couple were loyal, open to borrowing more and happy to stay with the same lender. Yet the product wouldn’t support their move.

They were offered two options. The first involved borrowing more on their current property before selling, which didn’t work in practice. The second was to complete the sale and move, then apply for a further advance afterwards. That didn’t help either, as they needed the money upfront to complete the purchase.

Their only realistic path forward meant paying an early repayment charge and applying elsewhere from scratch.

To the lender’s credit, it has taken the case seriously and promised a senior review. But it shouldn’t have reached that point. This couple weren’t trying to break the rules. They simply wanted to move house and borrow a little more. In the standard mortgage world, that would be entirely normal. The lender potentially loses a borrower, misses an opportunity for new business and leaves the adviser wondering how many more customers might end up in the same situation.

This isn’t a one-off. Most lifetime mortgage clients, and perhaps in some cases their advisers, don’t realise that porting works differently here. Many lenders only support it if the borrower is moving to a cheaper home. That’s not how things work anymore. Lots of older borrowers are choosing to upsize, move closer to family, or relocate to homes with better accessibility.

The issue isn’t just the policy, it’s the presentation. The idea that porting may not support upsizing is rarely flagged. You won’t always find it clearly explained in the offer documents; it often takes a deep dive into the terms and conditions before the limitations become obvious. By that point, clients may have already made decisions based on assumptions that don’t hold up.

Advisers, in turn, are left in the awkward position of managing expectations after the fact. This is exactly the kind of scenario Consumer Duty was meant to prevent.

Even when a lender supports the purchase in principle, other hurdles remain. Offer validity periods are a regular sticking point. Some lenders still issue offers valid for just three months, in some cases even less. That might work in a perfect world, but in today’s housing market, delays are common.

Chains collapse and legal processes take time. Older borrowers may need longer to finalise arrangements, especially if family members are involved. If an offer expires and the lender reissues at a different rate, it can materially change the affordability or overall suitability of the product.

For clients making financial decisions later in life, that lack of certainty adds pressure. From an adviser’s perspective, it’s difficult to square that with a product that’s supposed to offer peace of mind.

This isn’t about blaming lenders. Many have done good work expanding into the purchase space. The challenge is that the market has changed faster than the products.

 

Product evolution is needed

If lifetime mortgages are going to support the real-world needs of older buyers, the next phase must include:

  • More flexible porting policies that support upsizing as well as downsizing.
  • Clear, transparent communication in pre-sale documentation about what is and isn’t possible.
  • Longer offer validity periods or guaranteed re-offer terms to reflect the nature of property transactions.
  • Product design innovation to accommodate real-world scenarios like simultaneous sale and purchase.

 

The age 50-plus market isn’t a sideshow. It’s becoming a core part of the housing landscape. Lifetime mortgages can help people access the equity they’ve built, stay in control of their living arrangements and move for the right reasons. But only if the products evolve alongside their customers.

This isn’t about tweaking the margins. It’s about rethinking what ‘fit for purpose’ really means in this space. If we want to see positive outcomes for clients, and stronger long-term relationships for lenders, then now’s the time to start building lifetime mortgages around real scenarios, not assumptions from the past.