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Equity Review | August 20, 2019

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Will the Baby Boomer Generation be Able to Obtain Mortgage Finance into Retirement?

Will the Baby Boomer Generation be Able to Obtain Mortgage Finance into Retirement?
Kenneth Hardman

There was a time when having a mortgage during retirement was considered taboo. People were wary of borrowing during retirement, and it was certainly not something to be talked about openly. But times have changed, and social and cultural factors have influenced our attitudes towards borrowing in general. The nature of retirement has also altered over the years, and retirees of today are generally likely to be more active and have more needs compared to pensioners of the yore! Today more than ever there is a need for niche retirement credit solutions such as the recently withdrawn Halifax pensioner mortgage.

In spite of the demand for pensioner mortgages, the market itself is not very dynamic at the moment. However, the pulling out of the Halifax Retirement Home Plan has left a huge gap in the market, presenting a great business opportunity for lenders and equity release companies. As a result, more companies are set to enter the fray and more products are likely to become available soon. This can be evidenced already in the latter months of 2012, whereby niche retirement equity release mortgage plans from Hodge Lifetime and more2life has been introduced.

Are more pensioner mortgage schemes set to be launched and why? The short answer is that yes as the baby boomer generation now reaches retirement age and looking for the ability to obtain a mortgage during their retirement years.

However, the real answer on availability depends on several factors including your individual circumstances; the value of your property and your age are important factors, as is income during pensionable age.

The most common methodology companies currently use to determine the amount that a client can borrow is affordability. Affordability is determined by taking into account the total regular income and expenditure. Credit history is also taken into account by lending companies, as are any outstanding debts and loans, including credit card loans.

These are difficult financial times. Life expectancy is at its highest at the moment, and as people live for longer, financial and social support during retirement are becoming increasingly serious issues. The baby boomer generation is more active than its predecessors, and as such, it is necessary to find innovative solutions to enable these pensioners to plan for their retirement. Retirement mortgages are available, however they are currently in their infancy and there is a long road ahead before they become mainstream. More companies are set to enter the market soon.

An independent adviser with specialist knowledge in mortgage finance can help you find the right retirement solutions to meet your needs.