This situation has prompted a debate amongst lenders and others in the mortgage industry with headlines such as, ‘FCA has failed older borrowers’. Ray Boulger in his piece argues that the Financial Conduct Authority has let older borrowers down by failing to persuade mainstream lenders to cater for people approaching retirement. That same article noted that in November 2014 the Intermediary Mortgage Lenders Association found that homebuyers as young as 40 have been frozen out of the property market following the Mortgage Market Review.
Then last month this issue hit the headlines again when the Financial Ombudsman upheld a complaint against HSBC after it denied a couple in their 40s a mortgage on the grounds of their age. Following hard on the heels of that revelation were reports that industry experts have deemed individual underwriting for older mortgage borrowers unworkable, whilst the head of mortgage policy at the Building Societies Association pointed out that about a third of mortgage lending in 2014 was to people who will be over 65 when they repay their mortgage.
All of this points to a complex situation for older borrowers which strengthens the need for good advice being available to this group – and that’s before you add in the complexity of the new pension freedoms and the rapidly expanding Equity Release market with the extra product options that delivers. This group need advice on their borrowing options but also need good advice on their legal options. And brokers should ensure that they pay particular attention to the breadth of legal services a conveyancer has real expertise in so that they can signpost clients to a firm who can meet all the client’s legal needs including wills and estate planning services.
Arguably all borrowers should write a Will since their property purchase will probably be their largest asset but for older borrowers writing a Will and taking Estate Planning advice is a fundamental part of later life planning. A law firm can also advise clients to ensure that they put a Lasting Power of Attorney in place to enable their families to make the appropriate decisions regarding their financial affairs and their health and well-being should they lose capacity and be unable to make these decisions on their own behalf. Additionally a specialist law firm will also be able to advise these older clients on Inheritance Tax mitigation as part of their Estate Planning service. With increasing property prices more and more people’s assets will be above the Inheritance Tax thresholds and so this advice will be applicable to an increasing proportion of older people.
With age comes experience they say – certainly older borrowers need experienced financial and legal experts to help them with the increasingly complex decisions they need to make when buying a property.
