Building Societies Association launches guide to help older borrowers

With over half of the UK’s building societies now lending up to or over the age of 80, the Building Societies Association has launched a free consumer guide to help borrowers.

According to the Building Societies Association, 27 building societies, which hold £200 billion of mortgage assets between them, will now lend up to 80, 85 or have no maximum age limit.

The BSA said that six societies will now lend up to age 80; 10 societies will lend up to 85 and a further 11 have no maximum age limit and manually underwrite each case.

Paul Broadhead, head of mortgage policy at the BSA, said: “Since November there has been a marked shift towards increased flexibility for older borrowers. This is coupled with a better understanding and careful management of the different risks that apply to this type of lending. I am pleased to see building societies leading the charge. We are seeing innovation in the approach to underwriting and the development of processes better tailored to the specific circumstances of older borrowers.

“With the proportion of older borrowers only set to rise, this challenge must be faced by all lenders. Constructive work is underway across the market and I have high hopes for the current FCA project on the ageing population.”

The news comes seven months after the BSA launched its review into the issues being faced by borrowers in their forties and fifties onwards. Building societies have committed to complete the review within 12 months.

The Building Societies Association has also launched a free consumer guide to help support those needing mortgage finance heading into retirement.

Can I get a mortgage at my age? aims to bust myths about lending into retirement and provide consumers with clear information as well as sources for further guidance.

The guide covers key topics, like the link between pension freedoms and borrowing into retirement, affordability, equity release options and lifetime mortgages.

Speaking at the BSA conference, Jeremy Wood, chief executive of the Dudley Building Society, one of the first to remove its age limits, said: “We took an early decision to remove upper age limits across our whole product range and train our mortgage underwriters to better understand the needs of older borrowers.

“The demand for what we offer is significant and so far we have seen no increase in credit risk. In fact, many cases have been markedly better. Our sector has a fantastic track record for innovation and for not closing the doors in difficult times. I passionately believe that we ought to be shouting louder about our successes in meeting the needs of 21st century borrowers.”

Many mortgage lenders will currently only grant a mortgage up to an individual’s planned or state retirement date, so people in their 40s wanting to borrow past this point can struggle to get a loan.

Older borrowers need to be able to prove to lenders they have the income to afford loans which is not certain once they retire.

Building societies have pledged to review their maximum age limits for mortgage borrowers to help support those needing mortgage finance heading into retirement.

The Council of Mortgage Lenders and the Building Societies Association are both working with members to make it easier for older people to borrow.

Recent research from Halifax has found that one in three people aged 25 to 45 still expect to be paying off their mortgage in their 60s.

According to the report, the average age of a first-time buyer is now 30.4 years – nine months older than in 2010.

The leaflet Can I get a mortgage at my age? is available free online here. Printed copies will shortly be available from participating societies.

Societies with no age limits

Societies that will lend up to 80

Societies that will lend up to 85