Older borrowers looking for a mortgage deal will have more choice now that Aldermore has entered the later-life market.
The challenger bank has extended its mortgage offering to applicants with a range of products aimed at borrowers aged between 55 and 85. Previously, the maximum age limit was 70.
The new mortgages are available both for purchases and remortgages and will also help hard-pressed borrowers nearing the end of their term on interest-only mortgages.
The new range will feature two-, three-, five- and 10-year fixed-rate mortgages, as well as a variable option. There will be no limit on overpayments and no early repayment charges on the variable product. On the 10-year fixed-rate product, no early repayment changes will be applicable after five years.
Potentially, some mortgage holders could finish paying off their mortgage when they are 99 years old as at age 85 the maximum term of the later life product is 14 years.
Aldermore will assess affordability on the income at the outset of the loan (if the borrower has not already retired) and actual or anticipated retirement income, with the lowest outcome determining the maximum loan amount.
To qualify, borrowers must have at least 25% equity in their homes for repayment loans and 40% equity for interest-only loans. The maximum loan size is £400,000 with up to 75% loan to value (LTV) for capital repayment and up 60% LTV for interest-only. Interest rates vary from 3.38% for a two-year fixed (initial rate) with a LTV of 60% to 4.28% for a 10-year fix with 75% LTV.
If borrowers want to use the sale of their property as their repayment strategy, then they need to have at least £300,000 minimum equity in their property if their home is in London and the South East or a minimum of £175,000 equity if it is elsewhere in the UK.
Charles McDowell, Aldermore’s commercial director of mortgages, comments: “We can consider each case on an individual basis, ensuring we can give the customer the support they need. With our new Later Life Lending proposition, we truly believe we can help more people with their borrowing needs, empowering them to live the life they want in retirement.”
The product will be available initially through four designated partners - OpenWork, AToM, Personal Touch Financial Services (PTFS) and Finance Planning, all of which worked with Aldermore to develop this proposition.
Commenting on the product, David Hollingworth, associate director at L&C Mortgages (London & Country), says: “Older borrowers have found the tighter lender criteria has resulted in many lenders imposing maximum age caps that can effectively limit their options or leave them feeling excluded altogether.
“There has been some shift in lender approach more recently, and some of the smaller building societies have been more flexible for some time when it comes to older borrowers. Aldermore’s move to offer a range for over-55s is, therefore, welcome and offers the chance for the mortgage to be taken up to a maximum age of 99 at the end of the mortgage term.
“This will help to enhance the choice for those older borrowers who can afford to use a standard mortgage product and perhaps prefer that to the roll-up options of more traditional equity release products.”
|Aldermore product information|
|Maximum loan size||£400,000|
|Purpose||Purchase and remortgage|
|Two-year fixed (initial rate)||3.38%||3.68%|
|Three-year fixed (initial rate)||3.58%||3.88%|
|Five-year fixed (initial rate)||3.68%||3.98%|
|10-year fixed (initial rate)||3.98%||4.28%|
|AMR*+ 0.00%||AMR*+ 0.50|
Note: "AMR is the Aldermore Managed Rate, which is set by Aldermore.