New mortgage deals announced for those aged up to 85

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Borrowers will be able to take out new mortgages in their early 80s after a specialist lender launched new deals to meet demand from older customers.

Finance company Together has today started offering new mortgages which go up to an applicant’s 85th birthday. As the shortest mortgage the lender offers is over a three year term, this effectively means borrowers can be as old as 82 when they take out a new home loan.

The move is a result of demand from later life customers. Pete Ball, personal finance chief executive of Together, said the maximum age increase would help borrowers such as those working later in life, people needing finance following a divorce or who are in their 50s and 60s and coming to the end of interest only deals.

‘We’re increasing the maximum age at the end of the loan in response to what we see as a growing demand and more lenders need to follow suit. The UK has an ageing population who have healthier lifestyles and are working longer but many are surprised and frustrated by how few options are open to them when it comes to securing a mortgage,’ he said.

‘Together can take a common sense view of each application, looking at other sources of income, such as pensions and investments, as well as salaries of people working past pension age,’ he explained.

But he pointed out that it is essential for older borrowers to take appropriate advice on lending decisions which take into account their financial position as a whole. ‘But provided the customer can afford their repayments, we’ll consider lending to potential customers in their 60s, 70s or early 80s,’ he added.

After the financial crisis of 2008, many mainstream lenders cut back on the number of mortgages they offered to borrowers over the state pension age of 65. This meant that even with enough retirement income to meet repayments, many mortgage borrowers would be unwilling or unable to offer them a loan into their 70s.

However, the market has changed over the last few years. According to figures released by data provider Moneyfacts in January, there were 1,078 mortgages on the market that allowed the customer to take their loan past their 80th birthday.

Melanie Spencer, head of lender relationships for Twenty7Tec, which provides a mortgage sourcing platform, said the number of searches by brokers whose clients were aged between 55 and 85 had soared by 22.7% in the past 12 months alone.

Meanwhile, Andrew Montlake, of mortgage broker Corec, said the days of retiring with a mortgage paid off at 65 seem to have been ‘consigned to history’. He believes that for those that have a provable income in later life or pension income that demonstrates affordability, there is no reason why they should not be able to extend their borrowing capacity later in life. ‘Some do this because they want to use equity to invest, purchase rental investments or various other uses,’ he pointed out.

Another use which was becoming more common, and often necessary, was for parents or even grandparents to use their equity to help children or grandchildren with a deposit to get themselves on to the first rung of the housing ladder.

‘Whatever the reason, it is important for lenders to cater to the changing needs of borrowers, and lending past traditional age limits will become more and more common,’ said Montlake.

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