Case Study –Structuring Later Life Borrowing Beyond a Conventional Age Limit

The Situation

A couple, aged 66 and 70, approached Henry Dannell to explore their remortgage options.

Their preference was for a five-year fixed, interest-only mortgage. However, their ages meant the available mortgage term and the way different lenders would assess their income required careful consideration.

One applicant remained employed, while the couple also had rental and pension income available to support affordability.

The Challenge

The clients' ages restricted the number of lenders able to accommodate the required mortgage term. A five-year mortgage would take the older applicant to age 75. Some lenders applied maximum age criteria that could prevent the borrowing from continuing beyond this point, reducing the options available. The assessment therefore needed to consider more than the clients' current affordability. Their different sources of income, preferred mortgage term and intended repayment strategy all formed part of the wider picture. As the clients wanted an interest-only mortgage, an appropriate strategy for repaying the outstanding capital was also required. They owned another property, with its future sale intended to repay the mortgage balance.

The Solution

We assessed the clients' circumstances across the available lending options rather than assuming that their ages automatically required a particular type of later life mortgage. We identified a lender whose criteria could accommodate the required five-year term without applying a maximum age of 75 at the end of the mortgage. For this particular application, the lender was able to consider the clients' employed, rental and pension income for affordability purposes. The intended future sale of another property was also accepted as the repayment strategy for the interest-only balance. This enabled the clients to proceed with the five-year fixed, interest-only mortgage they preferred. The result was a mortgage structured around the clients' income position, preferred term and intended repayment strategy, rather than their ages being considered in isolation. The case demonstrates why later life borrowing requires an assessment of the client's complete financial circumstances. Age is an important consideration, but lender criteria can vary considerably. Understanding how different lenders assess income, maximum terms and repayment strategies can materially affect the options available. Please note: A mortgage is secured against your home. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it. With an interest-only mortgage, the capital remains outstanding and an appropriate repayment strategy is required. Lending into later life is subject to affordability, lender criteria and individual circumstances.