More borrowers will be able to extend their mortgage term beyond official pension age after it emerged some lenders were loosening their rules around maximum ages.
Following the financial crisis, mortgage lenders began restricting lending to older borrowers by applying a ‘maximum age at the end of the mortgage’ criteria to their products. It was one of a number of measures they used to reduce risk.
But analysis has revealed, over the past five years, the number of mortgages available to people who are aged in their seventies and eighties has been slowly creeping up.
It means now there are now well over 1,000 mortgages which mature when the borrower is 80 to 84. In February 2014 there were none.
Darren Cook, a finance expert at Moneyfacts.co.uk, who carried out the analysis and uncovered the data, said mortgage providers had become far more accommodating to borrowers who wished, or had no alternative but to, extend their mortgage term well past the official pension age.
He added: “The scaling back of strict criteria around the maximum age at the end of a mortgage must be a welcome relief for those borrowers who may have reached the end of their mortgage at 65 on an interest-only mortgage and have had few options available to turn to.”
Other reasons borrowers might want to extend their mortgage beyond pension age could include releasing cash from the equity in their home or purchasing a retirement property.
Although the number of mortgages which must end when the borrower reaches their early eighties has expanded, the 85+ market has also seen significant growth in the last five years.
Moneyfacts figures revealed there were now 263 products available which catered for people who wanted or needed to continuing borrowing beyond 85.
Cook said the softening of the maximum mortgage end age appeared to be widespread. He pointed out that in February 2014 just over half of all the mortgages on the market were allowed to mature when the borrower was 75 and over. Today it is 72%.
He added: “With this trend looking to continue as many of us retire later, older borrowers will welcome this extra choice.”
