You are here: Home - News -

‘Room for improvement’ on lending to older borrowers

  • 08/02/2017
  • 0
‘Room for improvement’ on lending to older borrowers
Lenders still have some way to go to adequately support older borrowers, one broker has claimed, as the Ombudsman has revealed examples of later life lending issues it has had to deal with.

The latest issue of Ombudsman News from the Financial Ombudsman Service outlines a number of cases seen recently which have centred on problems surrounded lending to older people.

For example, Mr N shared his home with his parents, and held a mortgage jointly with them. When his mother died, he wanted to put the mortgage into his and his father’s name, and extend the term by five years.

The lender refused to do so as Mr N’s father was over 90, despite the fact that under the original terms, the mortgage was not due to end until he was well into his 90s. After the Ombudsman was involved, the lender agreed to review the case and paid Mr N £500 to “reflect the upset caused by initially rejecting the case without considering it properly”.

A second case saw 65-year-old Mr B turned down when looking to extend his mortgage by five years, as they would only consider his future retirement income, rather than include his current substantial income from his own business.

The lender accepted they had applied their criteria too rigidly and should not have declined the application, agreeing to pay £500 in compensation.

The issue of mortgage lending into later life has caused much debate in recent times.

The Building Societies Association kicked things off with its Lending Into Retirement report in 2015, which came with the promise that members would review the maximum ages they would consider lending to.

Since then the Council of Mortgage Lenders has called for regulatory reform, pointing out that having different qualifications for mortgage advisers and IFAs is leading to “disjointed” later life advice.

Last year Mortgage Solutions held the first ever Later Life Lending Event, bringing together lenders, distributors and advisers to discuss how to improve the borrowing options for the UK’s ageing population.

Simon Pugh, Ombudsman manager, said that the signs were that lenders were responding positively to encouragement to introduce more flexibility into their decisions.

He added: “On the whole, lenders are more willing to work around age limits – which they’re entitled to set – particularly for existing customers. They’re also applying policy exceptions flexibly. Some of these developments – including some lenders’ decisions to revise their overall age criteria – have come about partly as result of the pragmatic conversations we’ve had as part of resolving individual complaints.”

Ray Boulger, senior technical manager at John Charcol, said that while the situation had improved, there was still a lot of room for improvement.

He said: “Big lenders just don’t play in this market at all. Some extend their maximum age to 80/85, but that’s only part of the story – it’s how you assess affordability to that age, and if the assessment doesn’t work, it’s irrelevant.”

He continued: “A few years ago the perception was that a lifetime mortgage was the last resort, but that has changed. The products available have radically changed to make them more flexible. The onus is on brokers to understand the options in that market. Whether they choose to advise on them is a commercial decision, but they have a moral and regulatory obligation to consider all options. There is a real danger that some people will end up not getting advice from across the piece.”

There are 0 Comment(s)

You may also be interested in

Business Skills

In this section, we offer short ‘how to’ guides on harder to crack areas of business. From social media, to regulation or niche product areas, we cover it all.


Our journalists interview key industry entrepreneurs, strategists and commentators for day-to-day market insight and a strategic view of where the industry is heading. We offer lessons for success and explore the opportunities for your business

Success in Practice

Here, we share case studies fleshing out best practice to help you decide what could work for your business. Take a look at how others approached complex tasks like launching a new mortgage lender, advising on a new product area or deciding to specialise in another. Learn from others mistakes and triumphs.


Each week, we ask top mortgage and property commentators with a unique perspective to examine a key news headline, market move or regulatory or political issue.


Vote in our weekly poll here. It’s your chance to tell us what you think and be heard on the top news stories of the week. Review our archive to find out what your industry really thinks and all our coverage of the results.

Top Comments

Be part of the conversation on Mortgage Solutions. We want to hear from you. We have a tool called Disqus to tell us which stories get the most comments each week. Every Friday, the team picks the most thoughtful or opinionated contributions from our readers to enjoy again. Don’t forget to share your favourite stories from the site on social media to keep the conversation going.
  • RT @robjupp: Great day yesterday for donations to @MortSleepOut. With Gift Aid, we are now close to £17,000. It would be great to get to £2…

Read previous post:
two men shaking hands
E.surv hires chief surveyor

Chartered surveyors e.surv has appointed David Harbour as chief surveyor starting on 20 February.