Taking out a mortgage after ‘retiral’ age is now a lot more flexible

Some lenders offer solutions to make a later life mortgage a reality, says Mark Thomson

According to the Office for National Statistics, onequarter of the UK population will be over ‘normal’ retirement age by 2034.

Given that the UK government abolished the default retirement age in 2011 and that 39 per cent of 65-70 year-olds would apparently prefer a period of part-time work before fully retiring, you could be forgiven for thinking there would be a wide choice of mortgage products specifically aimed at older borrowers.

Traditionally, mortgage lenders have set rules prohibiting the mortgage term running past the borrower’s expected retirement age (often 65), having taken a view in the distant past that only earned income was an acceptable means of making the monthly mortgage payments.

Such inflexibility in a changing labour market where there is now no such thing as a ‘normal’ retirement age, has often seen consumers of a certain age drawn towards the type of specialist ‘equity release’ products, where mortgage interest is typically added to the original mortgage sum as it falls due.

The outstanding balance (ie the initial capital sum, plus fees and interest over the term) is then repaid from the sale of the house, either upon the borrower going into long-term care or from their estate after death.

Some other providers’ Lifetime Mortgages offer the option to pay all or some of the interest or capital, thereby preserving some equity in the property after death.

What is perhaps less well known is that a growing number of traditional mortgage lenders are willing to offer solutions to make lending