Leeds reduces maximum lending age to 80
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Leeds Building Society has reduced its maximum lending age from 85 to 80 years old.
It has also made a number of changes to its interest-only criteria.
The maximum age it will allow at the end of the term is now 80 years old, while the maximum age at the date of application is 70 years old, with a maximum LTV of 70%.
It says loans that extend into retirement cannot be classified as FastTrack and retirement is either the age provided by the applicant or 65, whichever is earlier.
If the loan term extends into retirement an additional affordability assessment may also be required, based on the expected retirement income, will be required.
The society is also no longer accepting inheritance as an acceptable repayment strategy for interest-only mortgages.
The only acceptable repayment strategies are savings and investments and sale of property.
The maximum LTV for the savings or investment repayment strategy is 75% and the maximum LTV for the sale of property repayment strategy is 70%.
Additional declaration documentation will also need to be completed by the applicants.
The society is offering a specialist range of mortgages for borrowers who are applying on an interest-only basis where sale of property is the designated repayment vehicle.
It is also offering a specialist range of products for those over the age of 65 at the end of the mortgage term.
Any borrowers who will be over the age of 65 at the end of the mortgage term or applying to use sale of a property as a repayment vehicle will not be able to apply for the society’s standard product range.
The changes are with effect from close of business on August 30 2011. Any full applications already submitted online will be considered under the previous criteria.
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Readers' comments (4)
Peter Burrows | 31 Aug 2011 4:29 pm
Most of what's said makes sense apart from the 65 bit. Have they missed the fact that the government now says 67 is the norm. Is this treating customers fairly to make them clear the mortgage 2 years before retirement making repayments higher.
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Anonymous | 1 Sep 2011 11:44 am
I'M NOT HAPPY
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Matt Sutton | 1 Sep 2011 3:30 pm
This move further reduces the options for those in retirement and further tightens the noose around the retired market place for those with good pension incomes but mortgages still in place. We meet countless clients who have lived in their family home for decades, have a small but affordable mortgage but are being forced to downsize because they don’t want to take out an equity release scheme and are unable to secure finance as lenders will not lend based on age bias. The sole option within the equity release market with Stonehaven where you can pay the interest is a welcome scheme but as these are based on age and not income they aren’t always suitable and are always at higher than open market rates.
It seems ludicrous that those with the most secure income, a pension, are being penalised due to age and are effectively being forced out of their homes. We sell a lot of Equity Release products, and Equity Release is naturally a fantastic product in its own right where it fits and is best for the clients circumstances. However, the crux of the matter is that it doesn’t suit all retired customers, especially those who can afford to pay a mortgage, have substantial equity and want to continue to live in the home they have lived in for the majority of their lives or where they have raised a family.
With the elderly living and working longer this is likely to be an ever increasing issue and it needs the FSA to support lenders who lend into retirement responsibly, not limit their ability to offer a much needed and quality service.
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Anon | 6 Sep 2011 2:56 pm
@Peter and Matt The FSA are stating that 65 is retirement age and are viewing anything above that as requiring additional scrutiny.
The issue for lenders is that existing age policy is being put under scrutiny by the regulator with teh potential for future capital costs for this type of lending
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