Presumably, the former societal norm of paying off a mortgage by middle age fed the notion that releasing equity was the only reason to borrow against a home later in life.
This view persists in the minds of many borrowers: a recent survey by Suffolk Building Society found that 57% of brokers indicated that older clients believed equity release was their only option.

This is probably not helped by the sector’s long-held perception of risk; affordability rules introduced by the 2014 Mortgage Market Review saw lenders cap borrowing ages in favour of assessing on earned income, despite there being no mandated age restriction on mortgage lending.

To correct this, the Financial Conduct Authority (FCA) later encouraged lenders to introduce flexible mortgage options for older borrowers. So, the market moved further away from the global financial crash and proved responsible lending was ingrained in its processes; lenders that were emboldened by the regulator became comfortable expanding the terms they lend on. This resulted in an opening of standard mortgage propositions to older borrowers – in some cases, with no upper age limit.

Suffolk Building Society was one of the lenders that moved with the times and, in 2021, removed upper age limits across its standard mortgage range. The mutual can proudly say 52% of its mortgage applicants are now aged over 55.

Yet, borrowers still question their eligibility, as revealed by Suffolk’s survey.The truth is lenders are a lot less restrictive and not only willing to lend to older homeowners but will also consider various types of income, not just salary.

Like many of its peers, Suffolk Building Society can consider earned and self-employed income alongside pension income, rental income, investment income, and uncrystallised pension and investment pots. This is a consideration that will likely reassure those older borrowers, referenced by 54% of brokers, unaware of the different options for evidencing affordability (i.e. pensions and investments).

This broad-thinking approach to a borrower’s circumstances ties up with the FCA’s intention to encourage viewing pensions, savings, investments and housing wealth as part of a connected puzzle, rather than separate components of a person’s finances.

Suffolk Building Society allows older borrowers to access its standard mortgage range to reflect the various reasons a person may need a mortgage later in life.

Older homeowners may want to release equity to support family members or fund home improvements, leveraging the £2.5trn housing wealth they hold.
On the other end of the scale, it may only be later in life that they are able to buy their first home, and older borrowers deserve the same options as any other first-time buyer who just happens to be a few years younger.

They will also need options to move home, or refinance from an existing lender or provider. Whether they are financially capable or willing to meet monthly mortgage payments will determine which solution will best meet their needs – mainstream mortgage, retirement interest-only mortgage or equity release.

The mutual will lend up to 80% loan to value (LTV) on terms up to 40 years, with no age cap – except for its joint borrower sole proprietor (JBSP) proposition, where some limits apply.

The mortgage sector has evidently laid the groundwork for regulation to bring these things together, so there is no need to wait for official policy change when innovation has already led the way.
The FCA has cautioned that if the mortgage market does not rise to the challenge of meeting older borrowers’ financial needs, other sectors could step up to the plate.

Lender efforts need to be met with adviser expertise today. The mortgage sector already has the upper hand; just 9% of people in the UK seek financial advice for their pensions, investments or financial planning, but around 87% of mortgages are intermediated. A mortgage adviser may be the only financial advice some people get, giving this sector significant leverage.

There is no reason why borrowers should rule themselves out solely due to their age, a characteristic that should simply be a detail on a mortgage application, not a barrier.
Lenders have already decided that older borrowers need options – it is time for advisers and lenders to work together to help consumers catch up.