The Family Building Society, which gave evidence to the Community and Local Government’s Select Committee in Parliament, supports the committee’s assertion that older homeowners need more advice and information, so they can make informed choices about how and where they live.
Mark Bogard, chief executive of the Family Building Society, said making more housing available for older people would free up the market for younger families as they downsize.
He said: “Of course, finance can be a vital issue and some people may need to adapt their existing home or move to more appropriate housing through the help of a mortgage.
“The Family Building Society supports the recommendation from the Select Committee that if older borrowers are turned down by one lender they should be referred to those lenders who can help.
“We recognise that older borrowers are generally very responsible. The Family Building Society will lend to people in their 80s and our experience is very good.”
“The report also deals with issues around equity release products for older borrowers. These are appropriate in certain circumstances but are complex and need careful explanation and understanding. People really should look at the possible alternatives.”
The Family Building Society believes that a change of approach would encourage advisers to widely offer equity release and residential mortgages side-by-side.
Bogard said: “The advice sector has been largely segregated with mortgages split into normal residential and equity release. We believe that looking at all the options available to a borrower would serve the older borrower in particular better.
“People who take an equity release mortgage just need to understand the effect of compound interest on the loan over a 20 or 30 year period.
“Hopefully, they’ll enjoy their retirement that long. It is too easy to take the loan and then forget about it, not fully recognising the ultimate financial impact.
“Potential borrowers should also be advised of alternative options such as traditional mortgages that may be more appropriate and rather cheaper, especially in the long run.”