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Age concerns still killing good applications ‒ analysis

  • 03/10/2019
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Age concerns still killing good applications ‒ analysis
Brokers have welcomed lenders taking a more flexible approach to their minimum and maximum age limits, but have warned that there are still too many issues with finding mortgages for older borrowers.

This week Accord announced a host of changes to the ages of borrowers it would consider applications from, including hiking the maximum age at term expiry to 85.

Chris Maggs, senior commercial manager at Accord, said the lender wanted to provide “additional support” for landlords and make things easier for those planning to rely on a buy to let income into retirement.

However, intermediaries have warned that too many lenders take an unnecessarily restrictive approach to working with older borrowers, leaving them unable to access the funds they need.

Equity release can’t be right for everyone

Martin Stewart, director of London Money, cited a recent case with a couple aged 75 and 76 respectively looking to remortgage. Both were still working, with state pensions and rental income to boot, and while there was an agreement in principle, after the actual application went in it was declined.

He said: “There was plenty that was good about the case ‒ savings, low loan to value, reduced monthly cost ‒ but the thorny issue of the applicants’ age killed it dead.”

Stewart argued that with many lenders refusing to take employment income into account for applicants over the age of 75, there is a case of “demographics once again outrunning criteria”.

He continued: “There are 12 million people aged 65 or over in the UK and that number is set to rise – only a fool would assume every single one of them is suitable for equity release, so it’s time for the industry to wake up, take its collective nightcap off and start wearing its thinking cap instead.”

Forcing out good landlords

James Mole, managing director of London Belgravia Wealth Management, said that there was a clear difference between the way lenders handle cases depending on if they are residential or buy-to-let.

He explained: “With buy to let, over the years I have seen more and more lenders increase their upper age limits so the loan term can run much later. However, this can be a red herring ‒ although you can take a mortgage at 69 with a 25-year term, you will struggle to remortgage or get a loan once you are over 70/75, or at least struggle more.”

This was forcing out many good landlords who don’t really want to leave the market “and I think that’s wrong, especially as many want the rental income in retirement”.

Keeping repayments affordable

David Sheppard, managing director of Perception Finance, said finding a way to cater for older borrowers is key now.

He noted that those who want to buy a property that is more expensive in their mid‒ to late-40s can find it difficult to get the lengthy term they need in order to keep the repayments affordable.

He continued: “Lenders like HSBC, Santander and Nationwide can be good for those looking to take a term beyond 70 with the latter needing to see evidence of payment into a pension if retirement is more than 10 years away. That not only is a good solution for the borrower, but is a prudent approach by the lender in making sure there is some planning for retirement should the mortgage need to go that long.”

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