Paying a mortgage into your 80s might not be what you’d planned on doing when you first bought your house. But for most people retirement doesn’t look anything like it did even 30 years ago.
Rise of the “non-conformist” borrowers
National Counties Building Society has just signed off a mortgage for a couple in their 80s wanting cash to buy a houseboat. “It was simply something this couple wanted to do,” says the society’s chief executive Mark Bogard. “And they could afford the mortgage, so why not?”
The retirement age has risen. The value of pensions has fallen. We are less likely to have done the same job throughout our working lives; there are more opportunities to start new careers and businesses. Many more people have to, and also want to continue working into retirement.
We are healthier and more active in later life, more adventurous, and we’re travelling more. The “silver separators” and “silver splicers” are divorcing and marrying in their 50s, 60s and 70s.
There’s more that we want to, and need to, do with our money.
Sharing the family wealth
And our children’s lives are radically different as well. They will not necessarily be “settled” in their own homes by their 30s, or even 40s, and they are less able to help their children to get established in the property market than previous generations.
Divorce may mean that they face new financial challenges mid-life, which many parents want to help with.
All these are reasons why older home owners may be looking to access the value locked away in their homes.
Remortgaging your home
Or you may have come to the end of an interest-only mortgage, and you need to be able to refinance to stay in your own home.
Equity release loans have been one option. But cheaper, traditional mortgages are now increasingly available to older borrowers.
Demand creates new options
There were no mortgage products available in 2014 which could come to an end when the borrower was aged between 80 and 84 (that is, five-year mortgages granted to 75 year-olds).
There are now 1,078 products available to this age group today, according to data from Moneyfacts.
And would-be borrowers who will be aged 85 or over at the end of a mortgage now have eight times as many deals to choose from, compared with just five years ago.
Cash for the grandchildren
National Counties Building Society underwriter Phil Townsend says mortgage applicants in their 70s typically have three motives to borrow.
“They either want to raise money for children or grandchildren. Or they want to raise cash for a buy-to-let property to generate income. Or they want to buy a holiday home for themselves and their family to enjoy.”
Pre-planning for downsizing
“Sometimes homeowners want to buy their ‘downsizer’ property several years before they need to move into it,” says Richard Mason, chief underwriter at Harpenden Building Society, “especially if there’s a shortage of suitable properties in the chosen area and one comes onto the market. They can then rent it out until they want to move into it.”
A new flexibility
Darren Cook of Moneyfacts says “Over the past five years, mortgage providers have become far more accommodating to borrowers who wish, or may have no alternative but to extend their mortgage term well past the official pension age.”