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Challenges faced by older homeowners

Journalist: Jake Carter, Mortgage Introducer

ended 24. October 2023

Does the mortgage industry, on the whole, discriminate against older people?

How does the discrimination show itself? i.e. what are the lenders doing (or not doing) that discriminates?

What can be done to fix it this?

8 responses from the Newspage community

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Michelle Lawson
Director at Lawson Financial
I am going to be a bit controversial here and say that we should look at discrimination differently. Sometimes people have to understand the implications of actions and understand consequences and there may not be a solution for everyone. There are different options for older borrowers available such as Retirement Interest Only (known as RIO), Later Life lending, Equity Release- again this may not be right for all. This is the importance of getting solid advice that is reviewed throughout your mortgage life to ensure that your retirement plans and goals are met and adhered to rather than just adopting things, such as interest only and not reducing the capital owed, to make a mortgage cheaper at the time.
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Simon Bridgland
Director at Charwin Private Clients
It could be argued that retirement interest-only mortgages discriminate by lending being limited to the lower of current or retirement income, especially for those who perhaps have their own businesses, or those with other assets set to give a retirement income, where retirement doesn't look the same as it may for the average employed applicant. This would not happen with a traditional mortgage. Traditional mortgages don’t assume one or the other applicant is going to die, get sick (without sick pay), have children, lose their jobs, change jobs or anything else which is going to lower the household income. I get it that if income is set to reduce at a known point in time then the lower income should be used, however, nowadays retirement isn't set at age 65, people do get work again in retirement and people can work until an older age than they perhaps would have in the past.
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Justin Moy
Managing Director at EHF Mortgages
There are plenty of challenges within mortgage lending, not just age-related but for most borrowers there needs to be a means of making monthly payments and affording the general cost of life. Driven by recent market conditions, lenders are now allowing residential mortgages well into retirement, even up to age 80, if there is proveable retirement provision in place. And there are plenty of specific products for those in their early retirement or older, such as Interest Only options or Equity Release, that will provide an opportunity to borrow. I don't think the market discriminates, some lenders will be specialist lenders in key markets, but as an industry i think there has been a lot of positive change.
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Kundan Bhaduri
Property Developer and Portfolio Landlord at The Kushman Group
Older borrowers sometimes get limited options when it comes to mortgage products. Some lenders are still hesitant to offer longer-term mortgages to older individuals. Early retirees often have savings, investments and other retirement income sources, which is something not all lenders would consider in their affordability consideration. Lenders must revise their risk assessment methodologies to avoid these simple age-based discriminations. Rather than categorising older borrowers as high-risk solely due to their age, some lenders would do well to focus on a comprehensive evaluation of an individual's financial stability and their overall ability to repay. Access to affordable housing and homeownership should not be determined by one's age either. Financial institutions, the FCA, and industry stakeholders need to work together to create a mortgage market that is truly inclusive and fair, where age is not a barrier to securing the financing needed to purchase a home or an investment.
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Scott Taylor-Barr
Principal Adviser at Barnsdale Financial Management
Any form of underwriting, be it for a mortgage or insurance, is by its very nature discriminatory, its purpose is to look at the data and decide which people are too big a risk to take on. For older borrowers an underwriter needs to consider their ability to maintain the mortgage payments for the entire term of the loan, this will involve looking at someone's ability to continue working into older age (a barrister will likely be able to continue working to a much older age than a bricklayer, for example), as well as looking at their retirement plans; such as pensions and other investments to check that when they do stop working there is still sufficient income to maintain the mortgage payments. No lender wants to repossess the home of an 80-year-old, so they will tend to err on the side of caution in all their assumptions and judgments. As with all aspects of mortgages, some lenders deal with these types of cases better than others.
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Austyn Johnson
Founder at Mortgages For Actors
Understandably, anyone borrowing into retirement and beyond will be a higher risk than a 20 something person. But I think the risks should be negated with insurance policies. If lenders allowed this as a repayment method and made it a requirement, it would mean fewer issues at probate. BUT, I also think that it would mean people with illnesses would end up paying a lot more for a policy. Its a tough one. On the whole though, there are some good products out there for RIO, later life and retirement borrowing. Building Societies like Family BS are very good at this.
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Kirsty Wells
Director at Blueprint Mortgages & Protection
Over the last few years many lenders have started to relax their lending rules relating to max age, with a few of the big high street lenders allowing earned income to be used up to age 75. Also other lenders will lend into later years if pension income can be proved.

I have clients in their 50’s and 60’s that we have remortgaged recently and there were lots of options available to them.

I would recommend the public to seek guidance from a mortgage adviser who can do the research and work out the options rather than relying on their bank who they have been loyal to that they expect them to offer the best option.
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Elliot Cotterell
Director at Windsor Hill Mortgages and Cotterell & Cotterell Commercial Finance
In recent years lenders have become increasingly aware of a significant portion of the borrower market working longer into retirement and have been innovative in evolving their product offerings. With an ageing demographic and the so-called ‘Grey Pound’ being economically active well past retirement lenders will often extend terms past 68 years and up to 75 years with a handful up to 80 years old. Options include RIO mortgages, Equity Release (ER) mortgages and Home Reversion Plans. Lenders are also considering a wider set of repayment options with Downsizing, Pension Income and Pension pot release products. With BTL properties there is even better news with many lenders unconcerned about age and products up to 100 years are not uncommon. In summary, lenders have recognised not only the need but also the market opportunity for later-life lending and any restrictions are largely not discriminatory but a simple fact of the business case, just the same as with any sector of the market.