Older Borrower
- The days of retiring at 65 are changing, people are living longer, more active lives and borrowers are getting older. We have seen the demand for longer term mortgages rise over recent years.
Many of our older clients find themselves with mortgages still outstanding when they come to retirement, or have a mortgage term that is due to expire soon with the lender calling their loan in.
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What is a Later Life Mortgage?
With one in three homeowners with a mortgage being unsure if they will have managed to pay it off before they retire; older borrowers have more options than ever before as mortgage lenders have created solutions to help this growing group of borrowers in the UK.
… aimed at people over 55 and is a way of borrowing in your retirement or later years.
Some clients do not wish to move but do not have the funds available to clear their mortgage, or perhaps would like to move but do not have sufficient funds to make this a reality.
Others want to give their children or grandchildren an early inheritance, perhaps for a deposit on a house. There are many scenarios where a lifetime mortgage could be the right decision.
Solutions exist for clients in these scenarios and Bluebell Mortgages can guide you. We have access to products that can allow clients to continue their mortgage into retirement and depending on the client’s preference this can be with or without the need to make a monthly payment.
This is a complex area and it is therefore essential that you receive the correct advice.
Our advisers at Bluebell Mortgages have the specialist qualifications necessary to talk you through the options and provide advice & recommendations on the type of lifetime mortgage that is right for you.
What are the options for an older borrower?
There are many options to consider if you are over 55 and looking to borrow money:
Lenders recognise that people are now working longer than they once did, it is quite possible for people to continue well into their 70’s in full time employment. Some conventional mortgage lenders may offer mortgage terms right up to 85 years old and this may suit someone who is able to make a monthly payment and has the relevant income to borrow the loan they need.
This works in a similar way to a conventional mortgage in that your income is used to determine the size of loan you can obtain, however this type of mortgage doesn’t have an end date and so can be taken until death of the last borrower.
As such the lender will only take the income of the youngest borrower into account when making a decision on how much to lend. Borrowing can be taken on an interest only basis with the loan ultimately being repaid from the sale of the property.
A lifetime mortgage is a mortgage not based on your income, as lenders do not demand a payment from you every month. They will base their lending decisions on your age and health and the value of the property that you wish to raise a mortgage on. Therefore Lifetime mortgages can suit clients that have a smaller income (state pensions etc) are older and have a good amount of equity built up in their property.
With a lifetime mortgage payments are optional and clients are able to decide whether they add interest to their loan, known as rolling up the interest or pay the interest monthly/quarterly/annually etc.
What are some of the advantages & disadvantages of Older Borrowing?
As with conventional mortgages there are advantages and disadvantages to all Later Life mortgages.
Advantages
Lending is available on an interest only basis, so the debt will not increase
No end date on the term of the loan
Rates may be lower initially compared to a lifetime mortgage
Disadvantages
A monthly payment is required
The terms of the loan must be renegotiated at the end of the 2/3/5 year period
As the loan is granted for the life of the borrower the property survey can be harder to pass
Can be restrictions on what you can use the money for
A clients credit rating is always considered when making the lending decision
An affordability assessment is required
Advantages
The rate is fixed for the life of the borrower/s
No income is required
No monthly payment is required
Monthly payments or lump sum payments can be made to the capital.
Credit history is not always taken into account
Disadvantages
Some plans can have higher early repayment charges if the mortgage is no longer required
If interest is not paid it will be compounded & the loan will increase in size over the term and erode equity
As the loan is granted for the life of the borrower the property survey can be harder to pass
What can I use the money for?
Older borrowers can raise money for many different reasons, some including:
- Home improvements
- Gifting money to children/grandchildren for a house deposit
- Paying back an interest only mortgage when the term has expired
- Holidays
- Car
- Adaptations to the house to make life easier (new bathroom, handrails stairlift etc.)
- Repay debts
- Any other legal purpose
How am I protected?
As with conventional mortgages there are advantages and disadvantages to all older borrower mortgages.
Bluebell Mortgages have lifetime mortgage qualified advisors who have taken additional exams to be able to advise in this area.
We also provide an advice and recommendation service to you so that you can be sure you are getting the right mortgage for your circumstances.
All of the plans that Bluebell Mortgages recommend are provided by reputable lenders that are regulated by the Financial Conduct Authority.
In the case of lifetime mortgages all lenders recommended by Bluebell Mortgages are part of the Equity Release Council and abide by their code of conduct.
Here at Bluebell we are also members of the Equity Release Council so you can contact us with confidence knowing you are in safe hands.
Anyone contemplating a mortgage in later life should seek advice on their options, contact Bluebell Mortgages today and we will guide you so that you can make the right decision for you.
*To fully understand the features and risks of a Lifetime Mortgages, ask for a personalised illustration.
Lifetime Mortgages are only eligible for over 55s, can affect eligibility to state means-tested benefits and can affect the inheritance you may leave.
Your home may be repossessed if you do not keep up repayments on your mortgage.
Have questions? Call us on 01473 213312
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