Lenders are extending the number of mortgage products on offer to older homeowners and even relaxing their rules on lending to those over pension age.
Until recently, most lenders would not offer a loan to those looking to mortgage or remortgage over the age of 60.
However, as the UK pension age changes to reach 66 for both men and women by 2020 – and with the average age at which we can expect to live now 80 years old (78 for men and 82 for women) – banks and building societies are ready to tap into a growing market of older borrowers.
Lending available for the over 80s
New research from Moneyfacts has revealed that some products will even allow homeowners to borrow up to the age of 80 and over.
In 2014, there were no mortgage products on offer to those aged between 80 and 84. Now Moneyfacts’ data shows there are an extraordinary 1,078 mortages for that age bracket in today’s lending market.
For those who will be aged between 65 and 69 when their loan period ends, the number of products has shrunk from 923 to just 18 in the same period.
Moneyfacts’ research shows that, in 2014, 52 percent of all available mortgages could mature when the borrower was aged 75 or over. In 2019, the proportion is now 72 percent.
The expansion of mortgages to older people reflects our ageing population as well as the rising age of those becoming first-time buyers. Longer mortgage terms are also becoming the norm, with 30 and even 35-year terms more common.
Lenders more accommodating of older borrowers
Darren Cook, finance expert at Moneyfacts, said: “Over the past five years, mortgage providers have become far more accommodating to borrowers who wish or may have no alternative to extend their mortgage term well past the official pension age.
“In particular, the scaling back of strict criteria around the maximum age at the end of a mortgage must be a welcome relief for those borrowers who may have reached the end of their interest-only mortgage at age 65 and have had few options available to turn to or for those looking to release equity or purchase a retirement property.”
Trend has changed as retirement age rises
Cook noted that changes in the last two decades to the age at which people can receive the state pension have had an effect on mortgages.
He said: “The scrapping of the default retirement age in 2011 now means that the official pension age and retirement age are no longer one and the same, and employees can choose to work beyond stage pension age for reasons other than financial need.
“Lenders are clearly reacting to this, even at the highest tier, with those who will be aged 85 or over at the end of a mortgage now having eight times as many deals to choose form than they did five years ago, rising from 33 products in February 2014 to 263 this month.
“With this trend looking to continue as many of us retire later, older borrowers will welcome this extra choice.”