Britain’s building societies have pledged to review maximum age limits for borrowers. Those looking to buy, move or remortgage who are either older or looking to take the term of their mortgage past their state retirement age, may soon find it easier to get a mortgage to suit their needs.
This action is one of nine recommendations contained in a report entitled Lending into Retirement, proposed by the Building Societies Association (BSA).
The BSA points towards the ageing population and estimates by 2034 roughly a quarter of the population will be over 65. They say that house prices, student loans, divorce rates and the end of a default retirement age all mean that consumers are buying houses later in life and repaying for longer.
Currently many mortgage lenders will only grant a mortgage up to an individual’s planned or state retirement date - so for someone aged 45 who expects to retire at 67, the maximum mortgage term might be just 22 years.
Andy McBride, Business Development Director at Contractor Mortgages Made Easy said, “This is a welcome review for many of our contractor and self-employed clients. Those who are looking to take their mortgage term into retirement may find themselves eligible for a mortgage term that is more suitable for their repayment budget.”
Research from the BSA shows that around half of 25-34 year olds think they will need a mortgage that lasts into retirement, with contractor friendly lender Halifax stating the average age of an unassisted first time buyer is already at 31.
The trade body also plans to publish a guide for older borrowers to bring together the pension freedoms, inheritance, equity release, powers of attorney and existing age policies.
Paul Broadhead, head of mortgage policy at BSA says: “The time is right to review lending policies, examine how advice is provided and to work closely with a range of organisations across different sectors to ensure that lenders are equipped with the appropriate tools to respond to the rapidly changing demographics across the UK.”
Article By: Bradley George, Senior Mortgage Consultant at Contractor Mortgages Made Easy
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