Lending into Retirement
Did you know that within our later life lending proposition, clients can choose to split their term to reflect their changing financial position following retirement.
Affordability can be assessed separately against their current earned income, and future pension provision* enabling a proportion of the mortgage to be secured over an extended term. For example:
Mr & Mrs Client are 55 and 52 years of age and are moving to a new house and require a mortgage of £180,000 to support this new purchase.
Their current salaries are sufficient to support the £180,000 borrowing, but rather than apply a term to Mr scheduled retirement age (70). They were able to demonstrate that their pension provision was sufficient to support borrowing in retirement of £100,000**. This enabled an application to be agreed on a split extended term:
Part 1 £80,000 on a capital and repayment basic over 14 years
Part 2 £100,000 on an interest only basis for 29 years***
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*Verifiable income from a pension or other sustainable source, such as investments or rental income is required on application to determine the maximum level of borrowing that can extend into retirement.
**Clients must be able to demonstrate that part 2 of the loan remains affordable in the event of the early death of either party, or that the surviving borrower retains the ability to down-size to a property within a 5 mile radius of the mortgage security
***To qualify for interest only, clients must satisfy our existing interest only lending criteria.