Mortgages.scot

A scenario I was given quite recently. A couple in their mid-60s wanted to buy a holiday home. They had enough money saved to buy it outright but would rather take out a mortgage and preserve their savings. Both had a pension that was more than enough to meet lender affordability requirements. Aside from that pensions are for life so there is an argument that they both had a more stable income than most.

Most Lenders

The majority of lenders have the same general guidance on lending. They will lend up to a maximum term of 40 years or to age 75, whichever comes sooner. A few lend up to age 80.

Beyond that, there are also some lenders that are willing to consider lending beyond their stated guidance. Many notes that if a borrower is older than their max age by the time the mortgage ends they will still consider lending but will need to be sure it is affordable from retirement income.

How far beyond a lender's max-age they would be willing to consider is going to be on a case-by-case basis.

Ageism

The industry has come under fire for many years, decades in fact that they don't want to lend to older borrowers. Research in recent years has suggested:

• 1 in 10 people over 50 feel that lenders are consciously ageist.
• 2 in 5 people over 50 feel disadvantaged by their age when it comes to mortgage lending.
• The right products and support are more difficult to find as you get older.
• 30% of broker searches looking at applicants over 50 return no lending options.
• 15% of advisers report clients being rejected due to age.

Discriminating against age is not something that is part of lenders' policies. That said, policies are written with the intention of excluding older applicants with specific guidance that states a maximum lending age, 75 for example or a maximum term of 35/40 years. Ageism by stealth?

Why do lenders fear older applicants?

I mentioned in the scenario above that a couple has a pension each, they are not old being in their mid 60's and with guaranteed pension income a 25-year mortgage takes them up to their early 80s and is not a significant ask. So why are lenders fearful of them?

Fearful is perhaps the wrong word. It really comes down to risk assessment. It's not a good look for lenders to evict elderly homeowners should something go wrong. It can also be difficult for them to evict elderly homeowners.

What also doesn't help are the media stories telling of vulnerable parents being convinced by family to remortgage their home without really understanding what they were doing and certainly not aware their home was being put at risk. Lenders often come under fire for allowing these situations to happen. So they are rightly cautious of putting themselves in that position.

I have seen some lenders insist on borrowers over a certain age obtaining what is referred to as ILA or Independent Legal Advice. That is where the borrowers must go to a solicitor with no connection and have the mortgage explained to them along with the risk of losing the home. This offers protection to the lender.

Lenders are getting better at considering older applicants though.

The rise of lifetime lending

With lifetime mortgages on the rise which means applicants could have lending against their property into the 90s and beyond, lenders are becoming more experienced in dealing with applicants of all ages. More lenders on the high street will be offering lifetime mortgages in the years to come. The hope is that will give them more confidence to offer standard mortgages to older applications. But it will take time.

In the meantime, if you are looking for a mortgage in later life that is not a lifetime mortgage then contact a broker who will have experience with which lenders are willing to consider older applicants. It won't be easy for now.