Hodge is increasing the percentage of pension drawdown it can accept to help more customers borrowing into retirement.
The special lender argues that, with UK mortgage affordability at its weakest levels since 2008, the enhanced criteria could have a “big impact” for mature borrowers.
It means the lender’s new enhanced policy will enable it to accept applications for its later life mortgage products on a sliding scale from 3.3% up to 8%.
Having previously accepted 3% of drawdown pension income for all applicants on a blanket basis, the new policy is based on the age the customer intends to start drawing down the income.
The average retirement age of Hodge customers aged 50 and over is 69, which under the new criteria would see the lender use 5.6% of an individual’s pension fund for affordability reasons, and up to 8% for applicants above the age of 77.
Emma Graham (pictured), business development director at Hodge, said: “We fully recognise that as the needs of customers change, intermediaries working with them need support in being able to move with them, particularly in the current climate.
“This new enhanced approach we’re taking towards pension drawdown as income is another example of how we’ve used our underwriting expertise to challenge current policy.
“It’s arguably never been more important for lenders and intermediaries to work with consumers on a case-by-case basis, and as a specialist lender with a track record of responding to these needs wherever we can, this new policy allows our underwriters to tailor affordability based on intended retirement dates instead.”
