Expanding the landscape for the over 55s

Maeve Ward, managing director of Shawbrook Residential Mortgages explains the lender’s thinking behind its new product.

The Financial Conduct Authority (FCA) announced in 2013 that approximately 600,000 borrowers will see their interest-only mortgages mature before 2020. Of these customers, just under half are estimated to have a shortfall, with around a third of these expected to be over £50,000. Despite the Council of Mortgage Lenders (CML) reporting in May 2017 that the overall number of interest-only mortgages is decreasing (down from three million in 2011 to 1.9 million in 2016) there will be still a large tranche of people with an outstanding mortgage balance with no plans of how they are going to repay it.

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Those who will find this the hardest are the over 55s who are facing limited options from mainstream lenders; with some borrowers being too young to qualify for equity release, whilst at the same time being too old to remortgage, due to tighter lending restrictions linked to age. Unfortunately many of those who find themselves in this situation encounter a tough choice: either sell the family home or use pension pots to make up the difference. This is despite the fact that many over 55s still earn an income and have the means to make mortgage repayments. This is clearly a poor customer outcome and product innovation is needed to address the expected interest-only ‘ticking timebomb’.

We investigated the market and were disappointed by what we found, with the options open to people over 55 reaching the end of an interest-only mortgage very limited, especially those customers looking for an alternative to equity release. This is something that to us is both unacceptable and avoidable. As such, we have conducted extensive research in order to deliver a
product to market which provides a genuine alternative. This research lead us to launch our 55 Plus Interest-Only Mortgage product in March 2017.

This new Shawbrook product ensures an alternative is available, providing peace of mind, allowing these customers the opportunity to stay in their homes for up to an additional 15 years as well as keeping their savings in place for longer and giving them the chance to raise additional capital to fund their future plans.

Age should not be used as a reason to cut adrift borrowers aged 55 and above. As such, Shawbrook is putting these valued customers’ needs first whilst offering something not widely available from
mainstream lenders. If you have a customer enquiry or any questions with regard to the 55 Plus Interest-Only Mortgage product, please contact the Shawbrook team below who will be happy to assist.