The world of mortgage products is forever expanding, as financial providers adapt their lending models to fit modern lifestyles. One group for whom the future’s looking particularly bright is older borrowers. Many lenders are increasing their maximum ages to reflect changes in life expectancy and financial stability, and in fact one lender recently revealed that they would be offering mortgage products to borrowers up to the age of 85.
What’s changing about mortgages for older people?
Previously, most mortgage products were designed for younger and middle-aged borrowers, with few lenders willing to offer finance for the over-65s. The perception was that a lack of salaried income and potential declining health would make them riskier prospects. However, increasing numbers of mortgage providers are recognising that older people can be in a good position to take on extra financial commitments, and are extending their age ranges to cater for this.
Longer lives, more income
There are a few factors driving this change of attitude, most significantly our ageing population. In general, we’re living much longer, and many people are enjoying excellent health well into their retirement.
Older people can often also be quite wealthy. While the era of final salary pensions is more or less a thing of the past, many retired people still have them, and combined with private pension provision and other investments, this can provide a plentiful source of income. Better health in our 60s and beyond also means some people are continuing to work well past retirement age, or are embarking upon second careers.
Ultimately, mortgage providers are realising that arbitrary age cut-offs aren’t a very good way to determine a person’s suitability for financial products, and that many older people can actually be more financially stable than their younger counterparts.
Why might older people be looking for mortgage products?
While it’s unusual for older people to be actively upsizing their homes, there are lots of reasons why they might need access to mortgage finance.
In some cases, it can be the result of life changes. Divorce and bereavement can leave people needing to borrow money for a new home, while happier developments like getting married or moving to a different area to be closer to family can also create a need for some careful borrowing.
Older borrowers might also be looking to get into the buy-to-let market. Taking on rental properties can provide a good source of income, and retired people may feel they’re better able to cope with the administrative and practical aspects of being a landlord compared to those in full-time employment.
Bank of Mum and Dad
There’s another reason older people might want access to finance, of course. As the gulf between wages and house prices widens, younger professional people are finding it increasingly difficult to get on the property ladder, and many are having to ask their parents or grandparents to help them bridge the gap.
Often, Mum and Dad will be more financially secure, may already own property, and may have a decent regular income that makes then a more appealing prospect for a lender than a younger borrower with limited job security and few material assets. So by making it easier for older people to access finance, mortgage lenders may actually be helping younger buyers purchase their first homes.