Leading local estate agent Country Property has welcomed news that Britain’s biggest mortgage lenders have decided to increase their age limits 85.
Nick Cragg, proprietor of the firm based in Chipping Sodbury near Bristol, said that this week’s move by Nationwide Building Society maximum for mortgage maturity will increase from July for new applications, and be allowed to run until the borrower’s 85th birthday as part of wider efforts to offer borrowers greater support in retirement.
The move comes as Halifax increases its age limit for mortgages from 75 to 80 from Monday.
He said: “At last, building societies are waking up to the fact that we have an ageing population and a customer base which needs their help. We often hear about older borrowers who are struggling to get a mortgage because the big banks have strict rules on lending into retirement. Now it’s up to other lenders to take note of the Halifax’s lead, and follow suit.”
Nick Cragg, who is also proprietor of Auction House Gloucestershire, said that the change makes good business sense for building societies, as it’s estimated that a quarter of the population would be 65 or older by 2034.
He explained: “People who live for longer also work for longer and therefore need to borrow for longer. By contrast, lending only up until a planned retirement date penalises middle-aged borrowers with shorter terms, which inevitably cost more. Until now, a request for a five or ten year term would have meant putting the mortgage on a full capital repayment basis, which usually makes monthly repayments nigh-on impossible.”
Nick Cragg also said that an increasing number of older borrowers are raising money on their property to help their children or grandchildren buy their own home.
He added: “We mustn’t forget that older borrowers are not just borrowing for themselves. Recent research indicates that the ‘bank of mum and dad’ is now the equivalent of a top-ten mortgage lender, and will get involved in an estimated quarter of property transactions this year.
“The simple fact is that the need to borrow into retirement is becoming increasingly common, and the big lenders out there need to adapt their approval criteria accordingly.”