Standard later life borrowing is an alternative to equity release, according to Ipswich Building Society.
Standard later life borrowing is an alternative to equity release, according to Ipswich Building Society.
Supporting children, grandchildren or other family members onto the property ladder is becoming increasingly popular and in many cases necessary due to house price inflation.
Ipswich Building Society cautions borrowers to look beyond equity release and believe there are other ways to fund a gifted deposit.
The society believes that many mortgage providers, particularly those who undertake a manual lending approach rather than an automated one, are now in a position to better understand the finances of more mature applicants.
Charlotte Grimshaw, head of mortgages, at Ipswich Building Society, said: “Many people over a certain age tend to think that equity release is their only option if they want to borrow against the value in their home - it’s almost like a conditioned response.
“We want borrowers aged 55 and over to know that the mortgage market has moved on massively since the rigid age caps of over a decade ago and they may find that a standard residential mortgage is better suited to gifting a deposit whilst still allowing them to stay in their family home and in control of the inheritance they want to leave behind.
“In most cases, early retirement isn’t a switch that is suddenly flicked on. People in their 50s, 60s, 70s and even 80s may work part-time so it is often more of a gradual winding down, and of course, some people can’t afford to or don’t want to stop at all.
“And the same can be said for retirement income - it’s not simply a case of switching a pension pot for an annuity, there are now many variations of income and investments in later life that need to be taken into consideration, such as a company director continuing to receive income after retirement or being paid a fee for consultancy services.
“As an industry, we’re much better at understanding all of these nuances than we were, which leaves the door open to a greater number of mortgage options and choices for these generations.”
“Later life products are probably lagging behind equity release in terms of public recognition, in part due to the fact that different lenders use different terminology, whereas equity release has a stronger identity but mixed reception.
“However, borrowers and intermediaries should investigate all options before settling on the best method that allows homeowners to release capital from their property to gift a deposit.
“We’ve witnessed many later life borrowers starting the conversation around gifting a deposit for their offspring but then also deciding to free up some equity for their own home improvements too.
“It’s important that this group understand that mainstream mortgage providers do want to lend to them and that equity release is not their only option.”
