Business opportunities in later life lending also overlooked
Mortgage advisers are failing to provide comprehensive advice to clients over 50, leaving them unaware of their full borrowing options, according to Key Later Life Finance.
The equity release adviser argues that this oversight not only impacts customer outcomes but also represents a missed business opportunity for brokers, as demand for later life lending is expected to rise over the next 12 months.
With more than 40% of mortgages now extending beyond retirement age, Bank of England data suggests a growing need for advisers to rethink their approach. Despite an ageing population and an increasing number of homeowners purchasing properties later in life, the later life lending market remains underutilised by advisers.
Also, many older borrowers hesitate to seek advice due to concerns about affordability, fearing rejection for new loans because of lower retirement incomes. As a result, Key said they may default on to expensive standard variable rates or accept product transfers that are not necessarily the best option for them.
Adrian Brewer, head of later life lending at broker firm Access Financial Services, told Mortgage Introducer that the mortgage sector must do more to educate over-55s about their financing options.
Key argues that advisers must take the lead in engaging with older clients and researching a broader range of later life lending products. This aligns with the Financial Conduct Authority’s (FCA) Dear CEO letter, which urged firms to ensure customers fully consider their options under Consumer Duty regulations.
Research indicates that the over-50s collectively hold approximately £4.7 trillion in property wealth, equating to 78% of all property wealth in the UK. Those aged 50 to 64 own around £2.183 trillion.
Meanwhile, government figures show that average pensioner incomes stand at £20,120 per year, rising to £29,170 for couples. While many in this demographic face financial challenges in retirement, their property equity is a significant asset that should be factored into financial planning.
Mortgage advisers have historically played a key role in helping clients buy homes and move up the property ladder, but Key says their approach must now evolve to ensure continued positive outcomes as these customers age.
The later life lending market includes a variety of products, such as retirement interest-only (RIO) mortgages, term interest-only mortgages, long-term fixed rate loans designed for older borrowers, and lifetime mortgages with flexible repayment options. Some products also feature limited or no early repayment charges.
Key suggests that even advisers specialising in later life lending need to improve their approach. Market data shows that many fail to consider affordability factors — such as a borrower’s ability to make regular or occasional repayments — or neglect to include health and lifestyle information in their assessments. Given recent product innovations, these details are essential for securing the best outcomes.
“All advisers have an obligation to consider all later life lending options for over-50s customers under Consumer Duty, but too few are doing that and therefore failing their customers,” said Will Hale (pictured), chief executive of Key Advice. “Too many focus on their own area of expertise and do not think more widely.
“There is a huge opportunity for mortgage advisers to grow their businesses and improve their customers’ lives by focusing more on this sector and ensuring they stay abreast of all the product innovation taking place.”
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