There’s a quiet revolution happening in the world of mortgage lending, driven by the growing recognition that older borrowers no longer fit neatly into traditional categories.
Therefore, lenders must adapt and we’re seeing first-hand how the retirement landscape is evolving and how our approach to lending needs to shift accordingly.
For years, lending into retirement was treated with caution. Conservative loan-to-value caps, rigid age thresholds, and a general reluctance to engage with complexity meant that many people found themselves locked out of borrowing just when they needed it most. But slowly, sensibly, that landscape is changing.
MODIFYING POLICIES
Many different lenders across this sector are modifying their lending policies and criteria to meet these shifting borrowing needs and demands, especially for those approaching, or in,their 80’s as life expectancy, the quality of living and financial awareness in these later years continues to rise.
It’s against this backdrop that we recently increased our maximum LTV cap from 60% to 70% on interest-only mortgages extending beyond age 80.
This isn’t a move designed to grab headlines, but for our intermediary partners working with older clients needing funds for home improvements, debt consolidation, gifting, second homes, or restarting homeownership post-divorce, it’s a meaningful step forward.
It’s not about encouraging reckless borrowing, quite the opposite. It’s about acknowledging that for many people, financial life doesn’t end at retirement, it just takes on a slightly different meaning or shape.
Think about the divorcing 68-year-old, leaving the family home and looking to start again. She has a healthy lump sum, good pension income, and years of financial stability behind her, but limited options because the industry still treats her age as a risk.
Or the retired couple living in a home they love but now needing to make it safer, warmer, and more efficient as they age.
Or the grandfather wanting to release equity to help a granddaughter with her first home, while ensuring his own finances remain stable.
These aren’t niche cases. They’re fast becoming the norm.
TIME FOR NEW MODELS
What makes this particular change even more powerful is how it works in tandem with evolving affordability assessments. Our old model, testing income at age 80 and applying a low multiple, has long felt outdated.
Now, we assess income at 4.5 times salary up to retirement. After that, projected pension income is used with the same multiple, based on the mortgage balance at the time of retirement.
If it works at that point, it works. There is no need to re-test affordability just because the borrower turns a certain age. This shift creates a cleaner, clearer path to advice and it stops us from penalising people for simply growing older.
The truth is that later life lending has always sat at the intersection of logic and empathy. Clients often aren’t borrowing to fund extravagance. They’re using their property, the asset they’ve built over decades, to support themselves or others in meaningful ways.
They want flexibility. They want realism. And they want terms that to reflect the reality of retirement, not just the outdated perception of it.
Of course, lending into retirement still requires careful assessment. Age, income sources, repayment plans, and product flexibility all need to align. But the move toward higher LTVs and more practical income assessments brings the industry closer to a lending model that genuinely supports financial inclusion for older borrowers.
And we, as a lender, remain committed to supporting advisers and their clients by offering flexible mortgage solutions that reflect the real lives of modern retirees.
It’s a timely evolution, one that aligns with demographic trends, social changes, and the need for a more compassionate, common-sense approach to underwriting.
For advisers, it means new tools, new conversations, and a growing opportunity to add lasting value for clients in later life.
