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Hodge increases pension drawdown allowance on later life mortgages

  • 15/08/2023
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Hodge increases pension drawdown allowance on later life mortgages
Hodge has made changes to how much pension drawdown it will allow when calculating affordability on a later life mortgage.

The lender will now accept between 3.3. per cent to eight per cent of a borrower’s pension drawdown, up from three per cent previously. 

It said the change would help borrowers at a time when mortgage affordability had weakened. 

The three per cent acceptance was previously applied to all borrowers but the updated policy will be based on the age a borrower intends to start drawing down on their pension income. 

Hodge said the average retirement age of its borrowers aged 50 and over was 69, and the new criteria would allow such a borrower to use 5.6 per cent of their pension fund for affordability. This would rise to eight per cent for borrowers above the age of 77. 

Emma Graham (pictured), business development director at Hodge, said: “We fully recognise that as the needs of customers change, intermediaries working with them need support in being able to move with them, particularly in the current climate. 

“This new enhanced approach we’re taking towards pension drawdown as income is another example of how we’ve used our underwriting expertise to challenge current policy.” 

Graham added: “It’s arguably never been more important for lenders and intermediaries to work with consumers on a case-by-case basis, and as a specialist lender with a track record of responding to these needs wherever we can, this new policy allows our underwriters to tailor affordability based on intended retirement dates instead.” 

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