"This presents advisers with an opportunity to explore this ever-growing area of the mortgage market and take their first steps into the world of later life lending."
The later life lending market has undergone a significant amount of change over the last 10 years, with the traditional ‘property rich, cash poor’ equity release customer starting to be replaced by a new generation of borrower.
Shifting social dynamics, coupled with higher house prices and stagnant wages, has led to a growing number of people buying a house later in life. As a result, owning a property outright at retirement age is no longer a given, and for many of these new customers, working for longer and carrying mortgage debt past the age of retirement is now the norm.
This has led to something of an evolution in the later life lending market, with the traditional boundaries between the residential and later life lending sectors beginning to blur as a growing number of providers start to broaden their product offerings beyond equity release to include more later life lending options to customers, not just over the age of 55, but with some starting at 50.
While lifetime mortgages can offer borrowers flexibility and provide them with the option of rolling up the interest in the loan and repaying the balance when they pass away or go into care, other options such as higher LTV products that extend beyond the retirement years, are beginning to emerge to help tackle the shifting goalposts of the ageing population.
For example, some lenders are now offering traditional mortgages that can be taken up to, and past, the age of retirement, with some extending to the age of 80 or 85 provided the borrower meets the affordability assessment.
Another option that caters to the changing retirement landscape are retirement interest-only (RIO) mortgages, which were first introduced to the market in 2018. There are also the more recent payment lifetime plans, also offering the ability to make regular interest payments.
These offer a lifeline to those borrowers looking to release capital and improve their cash flow in later life and work by allowing the borrower to take out a mortgage and only repay the interest for a set term. The capital balance is then repaid when the property is sold because the borrower dies or enters long-term care.
While all these advancements are much needed to tackle some of the financial challenges older borrowers may face in later life, it is likely the merging of these two sectors will continue to evolve even further in the future as lenders seek ways to help make the transition from a residential mortgage to a later life lending product seamless for borrowers.
This presents advisers with an opportunity to explore this ever-growing area of the mortgage market and take their first steps into the world of later life lending. While this may initially appear daunting, particularly for those advisers unfamiliar with this area of the market, advisers cannot afford to ignore the shifting landscape.
This is even more pertinent since the introduction of Consumer Duty in July 2023, which means there is now even greater importance on advisers to provide holistic, whole-of-market advice to their clients.
For any adviser looking to take their first steps into the world of later life lending, joining a network and utilising the services, infrastructure and support available to members can be a good place to start.
At The Right Mortgage & Protection Network (TRM) for example, our strong and long-standing relationships with equity release and later life mortgage providers means our members can gain access to a whole of market panel of providers and products, and ensure they continue to offer support to their clients at every stage of the lifecycle.
Being part of a network also means advisers can receive full support, training and advice during the whole process, and can even work with, or refer their clients to, specialists within the business who can help them get up to speed on this new area of the market.
In the current climate of shifting demographics, Consumer Duty and higher living costs, ensuring the needs of later life borrowers are adequately covered is crucial. For advisers looking to expand their knowledge of the later life lending market, becoming part of a network can help them tap into this sector and help their business flourish.
