Over 65s “barred from finance”
While rules are put in place to protect those with poor credit ratings from borrowing beyond their means, they are having a negative impact on older borrowers, who are increasingly facing high minimum income or funding requirements or, even worse, being turned away from finance altogether.
Charlotte Nelson, finance expert at Moneyfacts.co.uk, said: “It can often feel as though older borrowers are penalised just for their age, regardless of their personal circumstances. With society changing and more people working well beyond their retirement age, it seems unfair that despite having the means to repay loans, they are still being barred from some of the best deals on the market.”
Remortgaging when close to traditional retirement age can be difficult due to the age restrictions put in place by many lenders, but as the average age of first-time buyers increases and with many opting for longer repayment terms, more and more buyers could find themselves in this awkward position.
“The average maximum age at the end of a mortgage is currently 67, which could cause remortgagors aged 50 and over to struggle,” said Nelson, “Some lenders are more flexible and agree to weigh up the mortgage application on an individual basis; however, the Mortgage Market Review (MMR) requires lenders to ensure that borrowers do not overstretch themselves and can afford the mortgage.”
When a borrower approaches retirement age lenders have to do additional checks to make sure the mortgagor can afford it on their pension, but more and more people are now choosing to work beyond the state pension age, which may not be taken into consideration.
“There is clearly a need for the mortgage market to be slightly more flexible towards older borrowers; particularly as so many are now working for longer,” said Nelson.
Mortgages aren’t the only hurdle older borrowers may face, as many find their age blocks them from accessing the most competitive personal loan deals as well.
While the more mature borrower will have access to some deals, the very best often escape them: for example, four out of the six best buys for a £5,000 personal loan over a three-year term have a maximum age ranging from just 60 at the start to 83 at the end of the loan.
Credit cards don’t impose a maximum age as the money borrowed is designed to be used over the shorter term. However, many cards do have minimum income requirements which could prevent many older borrowers on a limited income from obtaining one.
“For example, five out of the top 10 introductory interest-free purchase cards have a minimum income requirement; Barclaycard’s is by far the highest, being set at a minimum of £20,000 per year,” said Nelson, “As older borrowers are likely to have a reduced selection when choosing a deal, it is more important than ever to shop around to get the best one.”