In addition, with older borrowers likely to have a longer history of repayments, a healthy credit record will help get loans approved, he notes.
Regulation
Mr Butler says a growing number of people are reaching retirement with interest-only mortgages and “no means of repaying outside of selling their property”, requiring a new approach from lenders and the Financial Conduct Authority (FCA).
“The regulator has put pressure on lenders to develop solutions to support [borrowers] who are in a position to continue to make interest only payments,” he says.
“The regulation within the market has ensured that those solutions that are available and the advice… is of a very high standard. Where applicants are identified as vulnerable, higher levels of oversight are used to ensure appropriate advice standards are maintained.”
However, for those approaching retirement or reassessing their finances, there is a danger that consumers may still not get the best advice or be able to access the best products for their needs.
Sonia Fernandes, mortgages manager at UK Finance, warned in a blog published last year that the “siloed” state of later life lending made advice more complex, and called for the FCA and the Prudential Regulatory Authority to work closely together to make the rulebook more coherent and customer-friendly.
Beyond equity release
The changing nature of retirement means traditional routes such as equity release may not be the best option for borrowers.
However, outside of the secured loan market, providers have struggled to adapt to concepts such as phased or delayed retirement, according to Paul Lindsay, founder and CEO of Free2, a newly established loan platform for the over-55s. This means “loan underwriting rules will need to catch up with this new norm”, he adds.
“Our research showed a strong rejection of equity release by people below 70 who may have only recently repaid their mortgages with concerns about the effects of reducing capital for their estate,” Mr Lindsay says.
People aged over 55 and living on retirement income are “greatly underserved in terms of the size of loan they can borrow”, he adds.
Hodge Bank’s Ms Graham says those seeking loans later in life need products that are “flexible to the changing needs of customers”, for example by including early repayment options.
With the UK only just starting to lift lockdown measures, the post-pandemic world is yet to take shape. It is clear already, however, that some providers will have to adapt their approaches to meet new demand and help those whose circumstances have been challenged.
Quilter’s Ms Nixon says: “If, as a result of Covid-19, there are clients whose circumstances have changed and now need to maintain a mortgage longer or indeed secure a mortgage at an older age, there are lenders who can accommodate them.
