Anna Thompson (pictured) is an associate at Enness
When it comes to securing a mortgage, lenders commonly have non-negotiable criteria such as age. Many lenders have an average maximum age at the end of the mortgage term, usually between 70 and 75. Understandably, lenders are keen to avoid the risk of borrowers being unable to pay the debt further down the line.
But with more people stepping onto the property ladder later in life, working well beyond state retirement age, or simply living longer, there are a great many potential older borrowers who are unfairly penalised by this age limit, and struggling to either purchase new property or remortgage.
This is especially strange because many older borrowers looking for large loans are some of the wealthiest clients in the market. For such clients, old age and retirement do not represent a total loss of earnings; for many, retirement continues to be a period of stable and considerable income.
One problem is that income post retirement can be considered difficult to project. Many clients who are successful throughout their working life may technically be retired, but they will continue to receive income because of their fruitful careers.
For example, I recently worked with a client in his seventies who had enjoyed a successful career as an illustrator. My client was still working on occasion, but the bulk of his income came from royalties; such an income is difficult for lenders to understand as it is unpredictable.
Alternatively, many older individuals have large shares and property portfolios—these can give a healthy income, but non-vanilla income structures can be difficult for lenders to understand.
If you are an older borrower looking to secure a large mortgage, discussing your situation with a broker is the first step. Brokers understand complex income structures and pension plans; such understanding is key to presenting your case in the right way when applying for a mortgage.
Another key resource a good broker can offer is access to the private banks. Private and specialist banks take a more personal and holistic approach to an older client’s wealth, considering applications on a case-by-case basis.
These lenders are also more inclined to offer large loans on shorter terms, as they have a greater understanding of the range of loan exit strategies older borrowers might have. A broker can arrange for you to meet with private banks, enabling them to understand the full scope of your background and build a relationship moving forward. Lenders will also feel more comfortable with older borrowers when appropriate life insurance is arranged.
The key thing is that your broker gains a thorough understanding of your background, and then makes the right introductions for you with lenders. Many high net worth older borrowers pose virtually no risk to lenders—it is simply a case of understanding your case, and presenting it effectively to the appropriate lender.