Marsden says it is concerned about the number of older people who have interest-only mortgages and no way to pay them back when the term ends. Although equity release is an option for some, it adds that others may not qualify for the traditional equity release products on offer because they do not own a sufficient amount of equity in their home – typically two-thirds equity is needed to qualify.
Steve Robinson, Head of Lending at Marsden Building Society, said:
“We do see a market for a ‘transition mortgage’, helping clients bridge the gap in continuing with a conventional interest-only mortgage before considering equity release as one potential future option. The retirement landscape is changing. People are increasingly looking to work longer and with increased flexibility surrounding retirement planning.
“It is important that we operate responsibly when lending into or in retirement. We look at older borrowers differently to a first time buyer in their 30s - the income is different, their needs are different and often their borrowing requirement supports a desire to remain in their existing home or to release wealth from the property to support their plans in retirement, whether travelling, support for generational mortgages. We remain flexible on the purposes of borrowing and retain a focus on the affordability of the loan, both now and should circumstances change.”
