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

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