Rise in older homeowners retiring and still paying a mortgage
Consumers need more help to navigate the later life borrowing market as a growing number are coming to retirement still needing to pay off their mortgage, a report reveals.
Older mortgage customers face difficulties in accessing information, guidance and advice they need when it comes to borrowing in later life.
In research undertaken by financial institution trade body, UK Finance, it found some homeowners in their late 50s enjoy security, status and control, and because of house price rises, they feel wealthier. However, it is only a minority of older homeowners that are lucky enough to be in this position.
It found a growing number are coming to retirement not having paid off their mortgage, not having enough income and without adequate savings. For some, financial difficulties are compounded by health issues which prevent them working in later life.
‘Borrowing in later life can be uncomfortable’
Report author Jackie Wells, independent policy and strategy consultant at Jackie Wells and Associates said having to borrow in later life can be ‘uncomfortable’ and the process may not be straightforward.
She wrote: “The world of mortgage brokers is not something that many are familiar with but their first and natural port of call, the high street lender, may not be willing to extend them a mortgage and may be unable to provide any help with equity release. Friends and family may not be able to provide any useful insights and may simply warn against borrowing in later life. And, while some will investigate online, the internet is not accessible to all.”
The report suggests the new single financial guidance body being developed by the government should play a key part in helping people access information so they can compare and understand the market.
Wells added: “Lending to those in later life is often more complex for both lenders and advisers. The financial affairs of borrowers are more complicated, the sales process is extended, provider research is less streamlined, compliance and regulatory costs are higher, and conversion rates are lower than for traditional mortgages.”
“Consumers need more help in navigating the market for borrowing in later life. People need help in finding an intermediary or lender who can help them evaluate the options available to them and the risks to which those choices may expose them.”