Financial concerns driven by mortgage affordability and accessibility in the over-55s are rife, with over a quarter (28%) fearing they wouldn’t be able to afford their mortgage if it moved onto their lender’s Standard Variable Rate (SVR).
This is according to new research from Perenna which also reveals that an additional 36% would find it difficult to manage repayments, bringing the total who could struggle to almost two-thirds (64%) and potentially putting many into financial distress.
As a consequence, later life borrowers are left with few other options than to sell or downsize if facing issues. Over a third (37%) are considering selling their homes to relocate or downsize. This rises to nearly half in London (48%), where property prices are 34% higher than the average property price in the UK.
Lenders usually place end of term age limit restrictions for older borrowers trying to secure a new mortgage or remortgage. As a result, nearly two-thirds (60%) believe there is a lack of choice and financial products tailored to them, and over a third (36%) find their mortgage restrictive because of their age profile, being fundamentally excluded from the mortgage market.
According to Perenna, the situation raises concerns about an increase in financial exclusion. As life expectancies rise, the demand for mortgage products that cater to older demographics grows, with nearly a fifth (18%) of respondents stating that mortgage repayments have restricted their ability to travel or engage with leisure activities.
A further 17% of those surveyed report an impact on their financial stability and ability to support their family, while 9% have postponed retirement plans to pay off their mortgage.
The research comes as Perenna launches its Retirement Interest Only (RIO) mortgage for those aged over 55 , starting at 5.84% (up to a maximum 60% LTV).
Perenna chief executive and founder Arjan Verbeek commented “The current UK mortgage market is ageist. A whole demographic is being unfairly excluded and left behind, because of their age. We think that is wrong.
“The lack of options available for people over 55, underpinned by a fear of being trapped in their provider’s SVR, is putting many in financial distress. This shouldn’t be the case. Retirees should have solutions available to live the lives they desire and deserve. Our new long-term fixed rate retirement interest-only mortgage is a step towards financial freedom for older homeowners.”