MortgagesOct 9 2015

CML boss wants retirement lending

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CML boss wants retirement lending

The mortgage industry needs to ask itself fundamental questions about whether there is anything wrong with borrowing into retirement, according to the CML’s chairman.

Moray McDonald, who is also head of personal and business banking products at RBS, said in a CML blog post that lenders, builders, the government and regulators had more work to do on tackling the issue of housing the elderly.

He said part of this is because increasing numbers of people are taking out their first mortgages much later in life and having to pay it back over longer terms.

Mr McDonald said: “We need to consider some fundamental questions. For example, should it still be seen as some sort of personal failing not to have completely paid off your mortgage by the time you retire? What is wrong with owing – or borrowing – money in old age?”

He also asked whether new mortgage models would be needed in the future, such as ones that are fully paid down when customers are working, but where paying down can slow or even reverse to capitalisation when it is needed.

Adviser view

Kevin Hever, an adviser with Wolverhampton-based Cornerstone Financial, said: “There are many reasons why you could get a mortgage which goes into retirement so I wouldn’t say it is a personal failing.

“Mortgage lenders need to be doing more to offer products for retired people, and you need more innovation.”

Mike Pendergast, a financial adviser with Cheshire-based Zen Financial Services, said: “It is always ideal if clients have paid their mortgage off by the time they retire because it puts pressure on their retirement income.

“It does seem to be more common now for lenders to lend up to age 75 as long as they have got an income, but we always recommend clients pay off their mortgages.”