Many lenders restrict the amount that older people can borrow because of concerns about people living on pensions.
But borrowers have told Telegraph Money that, despite having a great deal of equity in their homes and having paid off the bulk of their loans, they are not being allowed to move their mortgage to another property or to extend their mortgage term even when the amount outstanding is tiny.
Some customers have been told by banks that it is their policy not to lend to over-70s. In one case, a customer organised a mortgage that would take her well into her 70s but, at the age of 71, she was told she could not move the amount she already owed to another property – because she was too old.
In another case, a woman in her early 60s was refused a five-year extension on just £10,000 because the longer term would take her past state pension age – even though she had no plans to retire and could show she had significant savings and equity in her house.
A third home owner, aged 70, was not allowed to extend the term on £20,000 of his mortgage, even though he had £600,000 equity in the property. After this newspaper intervened, NatWest promised this customer that they would retrain their branch and telephone staff and would be monitoring mortgage applications to make sure older people were not being discriminated against.
Following our intervention the other two customers were also contacted by their lender, Halifax, who apologised and promised to investigate further.
The cases follow a string of similar problems reported by Telegraph Money in recent years, which led to the City regulator telling lenders to be more flexible with older borrowers.
The regulator has advised older borrowers who are being turned down for loans to approach specialist lenders and mortgage brokers for help. Building societies also tend to be more flexible. But choosing a different lender isn’t an option for borrowers who want to extend or move an existing mortgage, especially as the amount involved is often so small that they can’t take it out as a new loan.
Earlier this month the FCA launched a review into how the financial industry treats older people, with the issue of people being turned down for mortgages because of perceptions about affordability forming an important part of the report.
Brian Murphy of the Mortgage Advice Bureau said the market needed to change to reflect a more active and wealthy retired population. He said regulation and a risk-averse environment in the aftermath of the financial crisis had stifled innovation and change.
“If someone of more mature years will have income in retirement where they can sustain or support a mortgage, why shouldn’t they be able to borrow?” he said. “We’re living longer and people are working longer. So why would it seem reasonable to have this arbitrary cut-off date to have repaid your mortgage?
"Some lenders have not changed their policy and criteria to meet the changing demographics.”
Lenders often want mortgages to end before the borrower’s retirement date over concern about the home owner’s ability to sustain their lifestyle on a smaller pension income.
But the cases seen by Telegraph Money involve people who have been retired for many years and have never missed a mortgage payment.
Mr Murphy said these cases were particularly inexplicable. “Rules are overcoming pragmatism. If someone is already in receipt of pension income you can pretty much say that it’s now guaranteed for the rest of their life.”
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