Building societies are set to review the maximum age limits for borrowers in a bid to make it easier for the more mature home buyer to take out a mortgage. The review comes in response to the ever increasing age of the population and high house prices.
At present, a number of older property purchasers find themselves being refused a mortgage because many lenders will only provide a mortgage up to an individual’s planned retirement date. This means that an applicant aged 47, who plans to retire at 67, can only have a mortgage for just 20 years.
However, with increasing life expectancy, high house prices and a rise in the age that couples are having children, the age at which people are able to buy a house is getting older and the repayment terms are getting longer.
As a result, the Building Societies Association (BSA), which represents all 44 UK building societies have committed to reviewing the maximum age limits to provide more support for older people looking to buy a home.
A report launched at a BSA event, called Lending Into Retirement, found that ironically building societies tend to be more flexible than banks when it comes to maximum age policies – despite leading the way in research on the issue.
The report highlighted that a number of building societies would lend up to the age of 80-85, whereas many of the largest banks have much tougher rules. For example, National Counties building society will consider applicants up to the age of 89 and Bath building society has no maximum age what so ever.
Head of Mortgage Policy at the BSA, Paul Broadhead says:
“This report identifies a number of areas that need further attention if we are going to meet the inevitable growth in demand for borrowing into, and in, retirement. The time is right to review lending policies … and to work closely with a range of organisations across different sectors to ensure lenders are equipped with the appropriate tools to respond to the rapidly changing demographics across the UK.”
With 11.6 million people over 65 in the UK at present and with predictions suggesting that by 2034 a quarter of the population will be over 65 it seems inevitable that rules regarding lending into retirement become more flexible.
Furthermore, BSA research has highlighted that around half of 25-34 believe that they will need a mortgage that lasts into retirement. It is therefore likely that the BSA’s decision to review its policies comes as pleasant news not just for the current older generation, but to those not too far off stepping onto the housing ladder.
BT www.propertysurveying.co.uk 12/11/15