The Intermediary – September 2025 - Flipbook - Page 77
L AT E R L I F E L E N D I N G
Opinion
Adapting to
challenges in
later life lending
O
ur financial needs
evolve over time.
Lending solutions
must adapt to meet
those changes.
While mortgages are
oen seen as a milestone for younger
buyers, borrowing in later life is
increasingly important.
Whether it’s funding home
improvements, supporting family
members, or retirement planning,
demand for flexible and responsible
lending options is growing.
According to The Generation Gap
Report by Lenvi, by 2050 one in four
people in the UK will be over 65. The
mortgage market is already reflecting
this development, with UK Finance
reporting 33,130 new loans advanced
to older borrowers in Q2 2025. This
is worth £5.2bn, up 3% year-on-year.
Total lending in the equity release
market has risen 10% year-on-year,
according to the Equity Release
Council. This landscape presents both
opportunities and challenges. Later
life borrowers require a variety of
solutions, as well as clear, responsible
guidance to make informed decisions.
Variety
Later life isn’t one-size-fits-all.
Our later life mortgages provide
repayment, part-and-part or interestonly solutions for retired customers
aged 55 to 85 at application, with
mortgage terms extending to age
90. We’ll accept earned income
up to age 75 and downsizing as a
repayment vehicle.
Lending into retirement mortgages
support clients aged 55 to 70 who
are approaching retirement, with
interest-only, repayment or partand-part solutions. Mortgage terms
can extend to age 80, and like later
life, we’ll accept earned income
up to age 75 and downsizing as a
repayment vehicle.
Retirement interest-only (RIO)
mortgages offer an alternative to
equity release, giving borrowers the
ability to release funds while only
repaying the interest each month.
The capital is repaid upon a life event
such as moving into long-term care or
passing away. Unlike equity release,
interest doesn’t roll up, protecting
remaining equity for inheritance.
These products offer borrowers
more choice. Some may want to
remortgage at the end of an interestonly term to remain in their home,
others to release funds to help family
or cover home improvements.
Collaboration
Advice is critical in later life lending.
Borrowers deserve to understand
every option that’s available to them.
That’s why we work closely with our
intermediary partners to regularly
review and update our lending
criteria. Some key criteria include:
Higher affordability multiples: Fivetimes income for pound-for-pound
remortgage cases on both Later Life
and RIO products.
Greater flexibility on income: State
and private pensions, 5% of pension
and investment portfolios (even if
they aren’t being drawn), and rental
or investment income (as long as the
income is declared).
Case-by-case underwriting: This
allows us to take a personal view of
each borrower’s circumstances, so
we’re willing to take a view on cases
even if they don’t quite fit criteria.
Communication
Product choice is only one part
of the equation. Clear, ongoing
communication ensures borrowers
JO CAVE
is head of mortgages
at Marsden Building Society
make informed decisions and can
manage their mortgage responsibly.
We equip brokers with factsheets
and resources, so that clients fully
understand their options before
commiing. Once a mortgage
is in place, we maintain regular
communication, such as repayment
reminders, to support borrowers
throughout their mortgage term.
This transparent approach
not only supports borrowers,
but also reinforces the trust that
intermediaries and clients place in us
as a specialist later life lender.
Adaptability and prudence
As a mutual, the Marsden has a
responsibility to adapt lending
solutions for a changing market,
while ensuring they’re sustainable.
One example is Joan and Paul, both
approaching 85. With an interestonly mortgage ending and their home
requiring lifestyle improvements,
their options were limited. Rejected
by high street lenders due to their
age, they were faced with selling or
equity release. Through a RIO, they
were able to transfer their existing
loan, add a lile extra, and continue
making manageable payments. They
also avoided rolled-up interest and
preserved equity for their children.
They’ve remained in their home and
funded a stairli, demonstrating
how the right solution can be
life-changing.
Later life lending will only become
more important for borrowers
like Joan and Paul. The Marsden is
commied to evolving alongside our
intermediaries and their clients. ●
September 2025 | The Intermediary
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