Older borrowers thinking about gifting a deposit to a family member may think equity release is their only route but with an ever-growing later life market there are more options available than ever – including a standard mortgage that is simply designed for later life borrowers.
The Later life alternative
An everchanging mortgage market has suggested that a standard residential mortgage is a strong alternative option to equity release for those looking to raise funds for gifting to family members, whether that be towards deposit on a new property or just to help out family in a broader capacity.
Benefits of standard mortgages, lending in/into retirement
- Standard residential mortgage rates for older borrowers are typically lower than equity release rates as a whole and, although the gap is narrowing, this can make thousands of pounds difference to the borrower over the life of a mortgage.
- By remortgaging, clients can change their later life mortgage deal to a new provider at the end of their deal period, so are not tied into any one provider or product for the life of the mortgage term.
- If later life mortgage borrowers come into an inheritance, they would be able to make overpayments or repay the loan, subject to the terms of the agreement with the lender. As equity release products are designed for the remainder of life, providers can make it can be more difficult and more expensive to arrange overpayments.
- With a standard mortgage for older borrowers, there are multiple repayment options – repayment, interest only or a combination of the two. All of these options give the clients more flexibility when planning for the future.
Key features of our Later Life mortgages
- No maximum age on products taken on repayment terms and interest only capped at 95 at the end of the term
- Up to 75% LTV for max loan size £750,000 – note our lending criteria for max LTVs depends on borrower retirmement and repayment type (maximum 75% LTV for applicants borrowing into retirement and maximum 70% LTV for applicants in retirement)
- 100% of pension income and 75% of investment income accepted when assessing affordability