"We want to create an educated market, where mainstream brokers recognise the scenarios where interest only mortgages could be a great option for their more mature customers."
To set up a business in the midst of a global pandemic had its challenges, but we had an underlying conviction that more mature borrowers deserved a better deal, not in the future but now. One year on, I feel proud that we have helped so many previously underserved borrowers who by virtue of age alone have been left high and dry when it comes to mortgages.
Our oldest customer to date is an 87-year widow who had six months left on her interest-only mortgage and was being pressured by her high street bank to pay back the capital. In real life, this meant she was faced with having to sell her family home of 30 years and move into rented accommodation. She had enough pension income to meet her payments, but that counted for nothing until we were able to offer her a fixed interest rate for life at a 75% loan-to-value for the full amount requested of £85,000 and she was overjoyed at being able to stay in her home.
From a customer perspective, it’s incomprehensible to be told that a mortgage that has been perfectly affordable for many, many years is suddenly now unaffordable when nothing in their circumstances has changed. We will continue to draw regulators’ attention to areas where evolutionary change is needed and are determined to be champions of change for the better. Retirement interest-only (RIO) mortgages are a step in the right direction for over-55s, but there is still a lot more to be done, an example being one-size-fits-all loan-to-income rules
A challenge we face is to make sure that brokers know there are viable mortgage options for the over-55s and we will work hard to highlight that RIO mortgages are classified by the FCA as mainstream products, meaning any mortgage broker can sell them. The additional equity release qualification is not required and the few firms that still insist on this are fast becoming outliers. The word 'retirement' in the title of RIO may be well-intentioned but it can be unhelpful, as some intermediaries view that as a signpost to the later life lending market, whilst customers aged 55-65 don’t associate with that word either – so we focus our messaging on 'interest-only mortgages for the over-55s' wherever we can.
As a specialist lender we are not hampered by the shackles of legacy credit and underwriting policy, and we always put the best interests of mature borrowers first: with products and processes tailored to their needs.
A great example of our fresh and innovative approach was the recent launch of our ongoing care fee programme. This means brokers will be paid 0.13% per annum (in addition to the normal 0.55% upfront) for 15 years after completion. In return for making an annual customer care call to identify if there are new or emerging vulnerabilities we should know about, the broker will benefit from a value-enhancing ongoing income stream. Having spent 25 years building one of the UK’s largest mortgage brokers, it has come as no surprise that our fresh approach has been warmly welcomed: after all, lenders often talk of 'partnership' - we have just taken that to a whole new level!
The progress we have made so far is a testament to our talented, dedicated and hard-working team. It is a huge credit to all that we have gelled so well, even over Zoom, and as we emerge from lockdowns it is so good to now be layering face-to-face brainstorming sessions in the office.
As we look ahead to our second year as a business, it is our aspiration to become the go-to place for mortgages for the over-55s. We want to create an educated market, where mainstream brokers recognise the scenarios where interest only mortgages could be a great option for their more mature customers.