Family Building Society has increased the maximum age at the end of a mortgage term to 95.
The changes make the lender the first to offer a 35-year repayment mortgage term to a 60-year-old, a 25-year deal to a 70-year-old and a 15-year term to an 80-year-old.
The new age limit is available to older borrowers taking out repayment or combined repayment and interest-only occupier mortgages, with the maximum term of the mortgage set by the age of the oldest borrower at the end of the term.
Family Building Society director of business development Keith Barber tells Mortgage Strategy that previously the lender’s maximum mortgage borrowing age was effectively 94 because an 89 year old could take out an interest-only deal with a five year term.
“The changed approach increases the term available at younger ages — 55 to 75 —where the impact is more significant,” says Barber.
“Changing socio-economics demand new strategies from lenders that address the needs of borrowers across the age range.
“We have a strong track record over many years of meeting the needs of older borrowers, part of the market that is particularly poorly served by many other lenders.”
Barber says that allowing older borrowers to have some or all of their mortgage on a repayment basis means the outstanding debt will be reducing over time and extending the term of the deals makes repayments more affordable.
“This will appeal to many retired borrowers who have found that, for whatever reason, they have not been able to repay their mortgage as quickly as they would have liked,” says Barber.
“This may mean that there is scope later for additional borrowing to address care needs or simply more money to pass on to family as an inheritance.”
Barber also confirmed that the lender is planning to launch a retirement interest-only product, which it aims to release by September this year.
In September 2017, the FCA said that lenders were failing to offer adequate product choice for older borrowers and in March the regulator removed hurdles on the sale of retirement interest-only products.