In our daily conversations with brokers there is always one common talking point they raise: “what new, innovative products can we offer our customers?”
One area that Saffron has been exploring with interest is ‘Lending into Retirement’. We have now launched a ‘new’ mortgage option for an ‘older’ customer; a mortgage for those who are looking to downsize and pay their mortgage off month by month once retirement is in progress. This product area gives brokers a golden opportunity to help service the lending requirements of an *increasing number of older households.
Retirement, and our lifestyle in retirement, is changing. In the past, retirement was predetermined. People stopped working in their 60s, and began to live off their pension. This was all very predictable; the period of retirement was defined, and could be short.
In 1982, average life expectancy in the UK was 72 — just seven years beyond men’s default retirement age of 65. Now, people can choose when they leave the workforce and can plan how they wish to live their lives after full time employment1. People live longer than they used to and also longer than they expect.
Last year a study showed that people in their 50s and 60s underestimate their chances of reaching 75 years of age. For example, men born in the 1940s were interviewed and only 65 per cent thought they would reach the age of 75. The actual figure achieving this age was 83 per cent. For women, their estimate was indicated that 65 per cent would reach an age of 75 but the actual figure was 89 per cent2.
The idea of stopping work at retirement is also changing. In a separate study, two-thirds regard work beyond state pension age as an excellent way of keeping an active mind. Just over three-quarters want to work part-time before retiring completely3. The population as a whole are increasingly looking to alter their working patterns as they get older and to continue to earn money in a flexible manner to fit in with their lifestyle. Retirement now means choice rather than limited options.
At Saffron we believe the providers of financial services need to adapt with the times. We believe in doing more to support the ambition and lifestyles of people in the modern world.
Some people don’t think it’s possible to get a mortgage in their 50s and 60s as retirement approaches. At Saffron though, we don’t believe you should be limited by your age and we like to be flexible. Your customers may be over 40 and have seen a property they want to call home, but lenders have already said no. We say, let’s talk further and see what we can do to help.
Lending into retirement
We have just launched our ‘Lending into Retirement – Downsizing’ mortgage, a standard interest-only mortgage with a difference. As the name suggests, it is available to customers who are hoping to borrow into their retirement. This mortgage stands out, as it allows your clients to downsize and pay off their loan during their retirement.
This repayment method and a wide variety of retirement incomes will also be considered. All applications will be individually assessed by one of our expert underwriters. Our aim is to help your clients to work out what is possible.
Customers need a minimum equity in their property of £250,000 but we will consider applications below this level when alternative assets are taken into account. We may also be able to accept a lower equity limit, depending on location.
What’s important to us is to learn about your clients’ circumstances, and then we can work out what we can do to help.
Where to go for help
If you have any questions please speak with our Business Development Mangers, who will be happy to help:
Holly Andrews: 01799 582885
Katie Sharpe: 01799 582923
Gemma Reynolds: 01799 582925
*Older households set to rise: Daily Moneyfacts Bulletin, 21 September 2018 – The number of households in England is expected to rise by 4m (17%) over the next 25 years, according to the ONS, equating to 159,000 more households a year. Those headed by someone over 65 will make up 88% of this growth, with a rise of 54% predicted by 2041, while those headed by someone under 65 will grow just 3%.