Later life mortgages.
For older borrower clients
Here’s what you need to know.
Who says older borrowers should have limited mortgage options? Not us!
We don’t operate separate products or dual pricing, so your clients aged 50, 60, 70 and older can select any of our main range deals. Here’s five things you should know:
- Available on our standard range of products, up to a 40-year term with no maximum age for repayment (capped at 95 at end of term for interest only).
- Interest only: sale and downsize up to 50% LTV (min equity £150,000), sale of another property up to 70% LTV.
- We’ll lend to 75% LTV for applicants borrowing into retirement, or 70% LTV if already in retirement (50% if there’s any interest only).
- We utilise pension assets as income, even if not currently being drawn – will use 80% of pension pot and divide by mortgage term, using the resulting figure as gross income.
- For income we’ll take 100% of regular pension income and 75% of investment income.
Key features of later life lending from Carly Scanlon, BDM.
Your questions answered.
We have no maximum age on capital and interest (repayment) mortgages, with interest only capped to age 95 at the end of the mortgage term.
For buy to let and holiday let mortgages there is no maximum age.
We do not have a general minimum income for residential cases, but for retired applicants there is a minimum income of £20,000, whether a joint or sole application.
We can assess multiple sources of income when calculating affordability. This includes 100% of employed, self employed, state and private pensions, plus 100% of rental (average the last 2 years SA302’s) and 75% of investment income being drawn.
We can accept income from a Self-invested Personal Pension (SIPPs) not currently being drawn, where we will use 80% of the fund value, which we divide by the mortgage term and use the resulting figure as an annual income.
Additionally, for self employed clients we can accept income into retirement if the customer will continue to receive dividends/income from the business.
For the most up to date information on accepted incomes please check our lending criteria.
Your clients can borrow funds to continue an existing mortgage, to purchase a new property for retirement, to generate income (through a holiday let or BTL purchase) or to prepare their home for later life by extending, renovating or adapting.
Alternatively, they could use the money to fund a significant lifestyle purchase such as a motorhome or static caravan, or to release a cash gift in order to help a child or grandchild to buy a home. Capital raising for gifting is limited to 50% LTV.
We won’t accept applications where the funds are needed to fund everyday living expenses, or are to top up savings or investments, or to purchase a car / holiday.
During the application process we will need to know full details of the current and projected income, including employment, pensions, investments, dividends etc.
For clients who will be retiring during the mortgage term we firstly calculate affordability on the whole balance using their current employed or self-employed income. We then calculate the projected residual mortgage balance at retirement age (max 70 or 75 if self-employed) and use the projected residual mortgage balance to assess affordability against their projected retirement income.
By taking this residual approach we’re able to apply a sensible calculation of actual mortgage costs against their retirement income, rather than assessing the affordability of the whole initial mortgage balance from the projected retirement income.
We require all applicants who are aged 75 or older at the time of application to seek independent legal advice, as a condition of our mortgage offer. The advice should be provided after the mortgage offer has been issued but before our funds are released. We also recommend anyone borrowing beyond 75 to have registered a lasting power of attorney for property and financial affairs.
No. For standard residential mortgages (non RIO) in joint names we do not calculate affordability based solely using one income. The mortgage will be assessed based on the applicants combined incomes, as the mortgage is for a set term, at the end of which repayment is required.
Where a loan is redeemed as a result of death of a borrower we will not apply any ERC or penalty. This applies whether there is a surviving borrower or not. We will also not charge interest on the mortgage from the date of the death of the last / sole borrower.
Our main residential range of mortgages are available to clients borrowing in or into retirement as standard, whether that is on a capital and repayment, interest only or even a part and part basis.
We do offer RIO products which are available through selected intermediaries, please contact your BDM or call our helpdesk on 0330 123 1073 (option 1) to see if you have access to these.
We’re on hand to help, so please either contact your BDM directly or speak to our helpdesk on 0330 123 1073 (option 1).
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