Spotlight on: later life.
Make older borrower cases simple with the Suffolk.
Few lending areas have seen such development as those for applicants over 55. When it comes to later life borrowers it’s not just about swapping an existing mortgage deal – we’re seeing an increasing amount of previously mortgage-free clients choosing a mortgage to fund later lifestyle choices.
And, for your clients taking a mortgage in or into retirement, this is where expert, manual underwriting can really help, as we’ll take a close look at your case rather than relying on a computer to make decisions for us.
Joan & Jim: case study.
Silver 60’s re-mortgaging to clear existing mortgage + gift funds to family.
- Current mortgage £150k
- Additional gift to children £100k
- £250k new mortgage on property value of £750k
- Both applicants are enjoying retirement but want to keep costs to a minimum – interest only is the preferred option.
- They have SIPPs and a private pension currently (and state pension due to kick in within the next couple of years).
- Drawdowns from the SIPP are sporadic – they only take income as needed and are using their savings for day-to-day living.
Affordability: the calculations.
- Based on the private pension and what can be evidenced in the SIPP we can look to use both for affordability.
- Private pension – £30,000 p/a & SIPP value – £600,000 (x 80% of fund [buffer for fund fluctuations] = £480,000, / 15 year term = £32,000 p/a for the term of the mortgage)
- Total usable income of £62,000 per annum.
- Using the SIPP in the background made all the difference – we were able to lend £250,000 on an interest only basis over a 15 year term.
Cheers to that!
The mortgage will take the applicants into their mid 70’s, on an interest only basis, with additional borrowing to support family, with downsizing as the repayment vehicle.
Latest news: we will now take the increased state pension, rising by 3.1% effective 6 April, on all applications submitted.
3 things to know about our later life offering
- No max age limit for capital and interest mortgages. Interest only capped at 95 at the end of the term.
- Later life available on standard product range. Max 75% LTV for applicants borrowing into retirement, or 70% LTV for applicants in retirement.
- Up to 40-year term. Max 30 years for buy to let.
3 reasons your clients may use a later life mortgage.
Mortgages have come a long way since your clients first started out and, whilst they may think a ‘standard’ residential mortgage is out of reach, quite often it might just provide the most sensible answer to their later life plans.
- Downsizing – To purchase and move into a new, smaller, home at their own speed, then selling their previous property – using surplus income for retirement spending.
- Releasing Cash – A lump sum of cash which can be used to purchase a lifestyle item, such as a motorhome or caravan, or to gift funds to children or grandchildren.
- BTL Income – Mortgaging a new home whilst retaining the former property to rent out, thus giving a monthly income stream.
Get in touch.
Whilst we can’t list everything we accept, or the conditions which apply, we’re on hand to help! If you want to find out more, or have a case in mind, give us a call on 0330 123 1073.
Click here to browse our residential and buy to let lending criteria.
Click here for our easy to use product finder that has all the info you need.
Click here for our affordability and rental cover calculators.
