Helping pensioners on to the property ladder
First time buyers struggling to get on to the property ladder are always newsworthy, but a lot less attention is paid to older borrowers.
These people are struggling to get a mortgage as a result of what some claim is an ageist attitude, with many banks and building societies only granting a loan up to an individual’s planned retirement date.
But with higher house prices and a rise in the age couples have children many people are buying later and as a result are attempting to opt for a longer repayment term.
Unfortunately lenders are generally reluctant to allow mortgages into retirement, so often the mortgage term is compressed for example from 20 years (requested by a 55-year-old) to 10 years to coincide with the normal retirement date.
Very often this makes the repayment unaffordable and locks people out of the housing market.
However, help is at hand with a 55 plus mortgage being launched that as the name suggests is exclusively for the over 55 market.
With the population getting older and almost 12m people over 65, this mortgage will have a lot of people to aim at.
Hodge Lifetime has now entered the mainstream markets with the over 55 mortgage, with customers being able to apply for a mortgage up to the age of 85.
The products maximum term will take them to their 95th birthday, or the youngest person’s 95th birthday if the loan is taken out by more than one person. Interest rates are reasonable with fixed rates from 3.49 per cent for two years ranging up to 3.95 per cent fixed for five years and also a discounted variable rate of 3.30 per cent for two years.
Hodge charge a product fee of £995 and will lend up to 60 per cent loan to value, with a minimum property value of £170,000.
This mortgage is available on an interest only basis which can keep costs down but remember you do have to have enough income to support the loan and also have this paid off by age 95.
But overall I think that this product is bringing more competition into an extremely under served market for mature borrowers and should be welcomed.
As always it is best to seek independent financial advice to ensure you make an informed decision on whether this kind of mortgage is right for you.