There are equity release mortgages in the market that are aimed specifically at the elderly generation. Schemes such as the now withdrawn, but very popular Halifax Retirement Home Plan mortgage to other lifetime equity release mortgages offered today, there is becoming a shortage of products available for borrowing into retirement. This represents an inverse relationship owing to the fact that a demand for financial lending solutions during retirement is growing significantly.
How times have changed.
There was a time when the notion of having a mortgage during retirement was considered taboo and there was much stigma attached to it. If one had a mortgage during retirement, it was not something that you would want other people to know. Even when equity release products were just beginning to enter the market, the attitudes toward borrowing during retirement were drastically different to the way they are today. People would not discuss the topic. Instead neighbours and friends alike were left to question how their lifestyles had suddenly changed; buying that new car or round the world cruise!
Today, the borrowing culture has pervaded all sections of society. People are willing and more open to carrying their mortgages and borrowing from pre-retirement into retirement. The fact is that owing to several social factors, many of us are left with no choice but to embrace the culture of mortgages and loans even during retirement. A rise in broken marriages before retirement and a higher divorce rate post retirement are creating these issues. Amongst the credit crunch and recent recession there has been an increase in redundancies and rising health concerns among society that are all partly responsible in creating a genuine need for financial equity release solutions for the elderly.
People are more open today in acknowledging the need for financial borrowing during retirement. Attitudes have certainly changed over the years and people have come to realise that post retirement mortgages may become increasingly necessary.
As it is, pensioners have a more stable income than people in employment, and as long as repayments can be managed from the pensionable income, retirement mortgages should not be written off without fair consideration.
The FSA has taken a firm stance on the subject of retirement mortgages by limiting the maximum age one can have a mortgage over. Also retirement interest only mortgages are major headlines at present with some mainstream mortgage lenders such as Nationwide point blank refusing to accept any form of new interest only mortgages.
The FSA has evidenced the volume of interest only mortgages that have been taken out of the past decade. With the levels of these mortgages having NO repayment vehicles the FSA have come down heavily foreseeing the future issues this is bound to create. Couple this with the potential for interest rates increasing sometime in the future and it could be a recipe for financial disaster at a time when the market is fragile enough.
There are some niche plans available in the market aimed at the post retirement market, and are specifically designed to meet their needs. Mortgages such as Stonehaven interest only mortgage scheme are a good alternative to the much sought after Halifax interest only mortgage. The popularity of the Halifax equity release scheme was vast when it entered the market, however the gap it left in the market after it pulled out was quite telling. It proved conclusively that there is a need for lending solutions aimed at well informed and financially savvy pensioners, who wish to find optimum ways to utilise their assets, while also protecting their life savings and ultimately their beneficiaries.
To discuss your pensioner mortgage requirements, contact the Compare Equity Release team on 0800 028 3142 or email [email protected]Back