Lending in/into Retirement
The Society undertakes lending to two categories of borrower where the end of the mortgage will be after retirement. One of these is the Society’s Retirement Interest-Only Mortgage and the other is defined as Lending in/into retirement.
Where the proposed end repayment date of a loan, whether long term to a younger borrower or shorter term to an older one, can be expected to fall after the borrower has reached retirement age, the underwriter will need comfort by way of appropriate information and assurances that the level of retirement income will be sufficient to continue to meet the ongoing monthly mortgage payments. For lending purposes the Society considers age 70 as normal retirement age. These mortgages effectively operate in the same way as a standard residential mortgage, as they have a specified term by the end of which it is expected all borrowing will be repaid.
The Society will consider mortgage applications where the term extends beyond the borrower’s expected retirement age, up to normal maximum age 85, where the borrower can clearly demonstrate a sustainable income stream to ensure the mortgage continues to be affordable throughout the term of the mortgage, including following any change in circumstances during the term, such as retirement.
The Society will take a prudent and proportionate approach to assessing the applicant’s income beyond retirement date. The degree of scrutiny to be adopted may vary according to the period of time remaining to retirement when the assessment is made. The closer the customer is to retiring, the more robust the evidence of the level of income in retirement should be.
For guarantor cases, where the personal guarantor is making a contribution towards the mortgage payments, an appropriate affordability assessment will be conducted, in line with the above.
Maximum Age
The maximum age permitted at the end of the mortgage term varies, depending upon product. All cases where there is lending past an applicant’s expected retirement age must be referred for approval.
The following table states the borrower’s maximum age where the Society would normally expect the borrowing to be repaid:
Product |
Normal Maximum Age |
Owner-Occupier |
85 |
Commercial (incl. Guest Houses) |
70 |
Buy to Let |
85 |
Retirement Interest-Only |
No Maximum* |
*The following table lists the term applied to Retirement Interest-Only Mortgages:
Age (Female) |
Term |
Age (Male) |
Term |
60 |
25 |
60 |
22 |
61 |
24 |
61 |
21 |
62 |
23 |
62 |
20 |
63 |
22 |
63 |
20 |
64 |
21 |
64 |
19 |
65 |
20 |
65 |
18 |
66 |
20 |
66 |
17 |
67 |
19 |
67 |
16 |
68 |
18 |
68 |
16 |
69 |
17 |
69 |
15 |
70 |
16 |
70 |
15 |
71 |
16 |
71 |
15 |
72 |
15 |
72 |
15 |
73 |
15 |
73 |
15 |
74 |
15 |
74 |
15 |
75 |
15 |
75 |
15 |
76 |
15 |
76 |
15 |
77 |
15 |
77 |
15 |
78 |
15 |
78 |
15 |
79 |
15 |
79 |
15 |
80 |
15 |
80 |
15 |
81 |
15 |
81 |
15 |
82 |
15 |
82 |
15 |
83 |
15 |
83 |
15 |
84 |
15 |
84 |
15 |
85 |
15 |
85 |
15 |
86 |
15 |
86 |
15 |
87 |
15 |
87 |
15 |
88 |
15 |
88 |
15 |
89 |
15 |
89 |
15 |
90 |
15 |
90 |
15 |
Over 90 |
15 |
Over 90 |
15 |
FOR INTERMEDIARY USE ONLY
