Sometimes we get a case that makes sense to us as brokers, it certainly makes sense to the client but in the world we live in, lenders somehow have a different perspective. In this instance I am referring to a certain lender (who shall remain nameless) approach to retirement. This particular lender takes the view that once you get to a certain age, you will stop work. That’s it, no thought about continuing work, no thought about downsizing property and certainly no thought about using pension income to repay the mortgage.
None of us have a clear understanding of how our finances will look when we eventually call it a day, continual tinkering with pension policy by successive governments has meant that what you start with doesn’t always turn up to be what you thought it would be when you finish. So in part I can understand a lenders view that nothing is certain about repaying a mortgage when you get past the state retirement age, but so too is the uncertainty of being permanently employed by one employer for your entire working life. Its our ability to adapt throughout a mortgage term contract that allows us to make the mortgage payments, so changing jobs or going self employed part way through a mortgage is commonplace and as long as the repayments are met then the lender remains happy no matter what your circumstances are. However if you are of a certain age and you ask for your mortgage to go past your state retirement date, the thought that you might have accounted for this and have made plans is simply not enough. It was just such a case where we had a person, professionally employed for over 20 years, looking to buy out his ex wife and remain in the property and needed funding so that he could remain in the same house along with his children until he reached retirement when he would downsize and repay from his equity the small remaining mortgage. As the mortgage was now dependent on just one salary it made sense to stretch the mortgage to age 70 to keep the payments at a low enough level that there wouldn’t be a chance of default. This particular lender though was having none of it despite putting all of the good reasons why we felt it was an acceptable risk. Thankfully not all lenders take this stance so like most of the clients with a difficult situation that come to us, we did resolve it, but you do think to yourself, do some lenders live in the same world?
Thoughts and opinions by TonyjTags: Lending past retirement, mortgage past retirement