This move follows the mutual’s decision to combine its later life and standard residential mortgages into one offering. The change is expected to benefit the over-55s.
Ipswich will take 80 per cent fund value of a pension that is not being drawn, divide it by the mortgage term and use it as gross income to support affordability and background loan-to-income calculations.
The borrower is allowed to have withdrawn the 25 per cent tax-free amount or more before the remaining pot is used for the assessment.
This applies to both crystallised and uncrystallised pension pots.
If an applicant is drawing a minumum amount due to having other income or still being in employment, Ipswich will consider what they can take from the pension over the term of the mortgage to support themselves.
If this is more than the current drawings, the higher amount will be used for the affordability check under the condition only 80 per cent of the fund value is used over the mortgage term.
Charlotte Grimshaw (pictured), head of intermediary relations at Ipswich Building Society, said: “By accepting pension assets as part of our affordability calculations we are recognising that this available income can, and should, be taken into account when assessing an applicant’s future ability to repay their mortgage.
“We believe this approach is the right way to go to ensure later life borrowers are not penalised for choosing to leave their pension savings invested for the potential of future growth. We know that older borrowers are taking a more rounded approach to their finances and, as a mortgage lender, we must do the same.”
