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A mortgage is a loan which is taken out by individuals, in many cases, to buy a home in the UK. Paying off a mortgage is often seen as a long-term commitment, with the standard amount of time for repayment usually set at 25 years. As such, many people spend a large proportion of their adult lives making repayments in order to reach homeownership.
However, for Britons who are slightly older, accessing a mortgage has proven difficult.
In many cases, people over the age of 55 have been unable to get onto an arrangement which suits their needs, which are inevitably changing as they age.
Research from mortgage broker Responsible Life, has revealed more than 80 percent of this age group are failing to access a mortgage that suits them.
This is the case when it comes to traditional mortgages, retirement mortgages and lifetime mortgages alike.
Problems have even been faced by individuals who have a large amount of equity in the home, or a substantial pension pot.
As a result, many have been forced to confront challenging circumstances to secure a mortgage which works for them.
Responsible Life has said the issue often lies with affordability criteria laid out when Britons look to secure a mortgage arrangement.
Lenders are often looking at whether or not a person has a reliable or guaranteed income when entering into a mortgage agreement.
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In many cases then, pension drawdown is not treated as income, which can leave over 55s at a disadvantage, despite having a significant amount of money.
Affordability criteria that relies solely upon the lower guaranteed income of a surviving spouse is also assessed to be at fault for the issue.
The Retirement Mortgage Service, provided by Responsible Life, found only 438 customers out of 2,540 were able to refinance onto another mortgage.
This could leave many individuals as effectively mortgage prisoners, an issue which is currently being addressed by the FCA.
Steve Wilkie, executive chairman of Responsible Life, commented on the findings.
He said: “Retirees are being frozen out of the mortgage market because they are being sabotaged by affordability rules the are not fit for purpose.
“Retired borrowers should be allowed to show a greater variety of repayment strategies to unlock lending in later life.
“These should include plans to downsize, pension drawdown and reverting to lifetime mortgage products at the end of a mortgage term.
“Such flexibility would be in the spirit of other financial innovations that have sought to make it easier for the over 55s to navigate retirement, namely pension freedoms.”
There are however, alternative options to a traditional mortgage currently available.
For many over 55s, equity release has allowed them to remortgage their remaining debt to a lifetime mortgage, or helped them to access a lump sum.
However, Britons are urged to understand the implications of equity release before jumping into an arrangement.
Homeowners can speak to a mortgage broker to discuss their individual circumstances and find out more about their options.
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