Nationwide Building Society is increasing its maximum age for a mortgage from 75 to 85, the highest age limit of any high street lender.
The change will enable existing customers with retirement income to borrow up to the age of 80, with a maximum age at maturity of 85. A range of mortgage borrowing needs will be supported, including house purchase and further advances.
The option will be available on all standard Nationwide mortgage products up to 60% loan-to-value and a maximum loan size of £150,000. The revised criteria will be effective from July 2016.
Henry Jordan, Nationwide head of mortgages, said: “We are taking a series of steps to meet a growing demand from customers to be able to borrow in later life. These customers are often asset rich, with significant equity in their home, and they wish to have the flexibility to borrow against it.
“Access to the mainstream market has been a challenge for older customers, resulting in their needs going unfulfilled. This measure helps to address these needs in a prudent, controlled manner. Nationwide is committed to providing a range of options for all customers and this will be the first step toward developing a wider range of options for those looking to borrow into retirement.”
It follows the news last week that Halifax was increasing its minimum lending age from 75 to 80.
Hugh Wade-Jones, managing director at Enness Private Clients, said: “It’s good to see the mainstream market finally responding to industry calls for fairer treatment of elderly borrowers’ mortgage requirements. We have seen the local building societies loosen maximum age criteria over the course of the year and it’s great to see Nationwide and Halifax follow suit.
“There is still more to be done, however. We have many clients adversely affected by these arbitrary rules. Some have warned the knock-on effect of younger borrowers now having the ability to take a repayment mortgage until a much later age will further inflate house prices. However, as long as lenders continue to lend in a considered way, I think this is unlikely.”
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 and some lenders have increased their maximum ages.
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.
What Mortgage has teamed up with London & Country to offer you expert advice on the right mortgage deal.
Whether you’re buying a new home, remortgaging to a new deal or buying an investment property, L&C can help – and you’ll pay no fee for their advice. To find out more, click here.
