The stringent Mortgage Market Review (MMR) rules are highlighting the challenge for the over 55s in securing funding. This has been heightened by lender’s different interpretation and implementation of the rules.
In a review published in May 2013 the Financial Conduct Authority (FCA) predicted that the future for older buyers on interest only mortgages would be difficult. The review noted that:
- 2.6 million interest only mortgages will be due for repayment within the next 30 years and while nine out of 10 (90 per cent, 2.34 million people) have a strategy to repay their mortgage, 10 per cent – equivalent to 260,000 people do not have a plan to repay their mortgage at the end of the term.
- Estimates produced for the FCA suggest that up to 50% of interest only borrowers may not have sufficient money or an insurance or pension scheme to repay their mortgage at the end of the term.
- The FCA estimates that older borrowers are underestimating the potential shortfall on their mortgage with estimates produced showing that shortfalls could be up to 50% higher than borrowers predict.
- 21% of borrowers intend to use savings to repay their mortgage while 19% will move to smaller homes and pay off their mortgage.
- 15% of borrowers plan to re-mortgage but may not be aware that this has become increasingly difficult since MMR.
Following the MMR many lenders have tightened up their criteria in relation to older borrowers due to concerns that they will be unable to afford mortgage payments into and beyond retirement. Individuals are seeking specialist advice from mortgage brokers who are able to access lifetime and retirement mortgages some of which have little or no reliance on income into retirement.
Ask ERIC Retirement Finance Specialists offer independent advice without obligation. Tel: 0800 0776885
Those who may consider releasing cash locked up in their home should seek independent, impartial advice to ensure that it is the best option for them.
The Equity Release Information Centre is an Equity Release specialist broker with fully qualified advisors who will compare the whole of the market and only recommend a plan if it’s in your best interests. As the longest established experts in this field they are in a position to offer exclusive and preferential plans and rates that are not available direct.
A changing market place including new and innovative products, coupled with increasing property values and low interest rates, means that individuals on existing plans can make use of a no obligation review of their existing policy.
Tel 0800 0776885 or email: firstname.lastname@example.org. A free guide is available at www.askeric.tv.
Equity Release may involve a lifetime mortgage or a home reversion plan. To understand the features and risks, ask for a personalised illustration. Plan availability is subject to lenders criteria. The Equity Release Information Centre provide advice for free and without obligation. Only if you choose to proceed and your case completes would a typical fee of 1.5% of the amount released be payable.