Hodge adjusts LTV to aid uptick in intergenerational gifting

Hodge adjusts LTV to aid uptick in intergenerational gifting
Photographer: Jason Alden/Bloomberg

Hodge, an intermediary-only specialist lender, has increased the loan-to-value of its repayment mortgages for those aged 50 and above to aid an uptick it has seen in intergenerational gifting.

The Cardiff-based lender has raised the loan-to-value on its two and five year fixed rate 50 plus repayment mortgages to 85 per cent, having previously only offered these mortgages at 75 per cent loan-to-value.

Fixed rates on these mortgages range from 3.49 to 3.75 per cent.

Emma Graham, the lender’s business development director, said: “With the help of our intermediary partners, we have been researching the type of customer who uses our 50 plus repayment mortgage product.

“[We] have seen that many are using it to re-mortgage current interest-only mortgages that are coming to maturity. A number of customers are also taking the opportunity to capital raise at the same time for a variety of reasons, including home improvements and intergenerational gifting.” 

The lender cited Financial Conduct Authority figures, which predict around 40,000 interest-only residential mortgages will mature every year until 2032, the majority of those interest-only borrowers being aged 65 and over. 

“This, coupled with our own research, has helped us make this latest change to our 50 plus repayment mortgage products. Again, it’s about flexibility and giving our customers what they need at this stage of their lives to help them achieve their financial goals,” said Graham.

She added: “Hodge’s 50 plus repayment mortgages are products that enable customers later in life to utilise earned income up to the age of 80. This, coupled with the fact that income multiples up to six times are considered for like-for-like remortgages continue to make this product compelling.”

Others in the industry have tracked an uptick in the use of later life mortgages for intergenerational wealth transfer.

David Forsdyke, Knight Frank’s high-net-worth equity release boss, told FTAdviser late last year that homeowner attitudes “have shifted”.

“Many now recognise the multiple benefits of unlocking their property wealth in later life – whether that’s to improve their lifestyle, help their children financially or to benefit from the tax advantages it can bring,” he said.

In 2021, some 52 per cent of mortgage lending to homeowners this year came with terms which extended beyond the main borrower’s 65th birthday - marking the first year such a proportion has exceeded 50 per cent.