Even with the impending budget, it’s not all doom and gloom in the later life sector and there’s plenty of opportunity to help clients in retirement.
2025 started with a bang for the later life sector. The value of lending to the over 55s in Q1 was £6.1bn, up a staggering 42.6% annually. In Q2 we saw the market stabilise at a value of £5.2bn, up 3% annually (The Intermediary, 2025) *.
Whilst we’re waiting for Q3 figures, we carried out a survey to several brokers to assess their outlook on the market over the next six months. Brokers seemed cautiously optimistic, with 75% predicting an increase or no change to business levels.
Since the August Bank of England Bank Rate change, 40% of brokers had seen an increase in application, and 52% reported no change.
Demand from first time buyers is still there with 64% of brokers reporting a desire from young people to get onto the property ladder. This can have an impact on the later life sector – 65% of brokers also noticed an increase in enquiries where family members wanted to support their children’s and grandchildren’s’ mortgage or moving costs.
Budget uncertainty or business as usual?
There are perhaps indicators of some home movers pressing pause due to the impending budget, and 69% of brokers thought property tax reforms trailed in the media, and likely to be announced in November, will have a negative impact on the market. But the market certainly hasn’t come to a halt.
Whilst only 17% of brokers responding to the survey had seen an increase in applications for moving home over the past six months, 48% had seen an increase in applications for remortgaging and 58% for product transfers.
When asked what measures they’d like to see the Government introduce to benefit homeowners and landlords in the forthcoming budget, 23% cited Stamp Duty changes and 10% said more support of first-time buyers.
Stamp Duty is clearly a sticking point, with 73% of brokers also saying that they’d like to see it abolished for downsizers to get more people into homeownership.
Standard mortgages over specialist later life options
Later life and Interest-Only mortgages were selected by brokers as the most underserved areas of the market.
According to UK Finance data, in Q2 this year most loans to the over 55s (89%) were standard mortgages; only 10% were lifetime and less than 1% were RIOs.
Whilst equity release might be suitable for some, a lot of ‘older’ borrowers are simply too young to go down that road just yet. RIO’s also have their place, but the death stress test can make affordability very low — and in many cases this means the client can’t get the borrowing they need.
A mainstream standard Repayment or Interest-Only mortgage can often be a good, more affordable and more cost-effective solution. However, many clients and brokers alike are unaware that they’re even an option. Education is crucial to ensure clients know all possible options available to them, so that they can carefully choose the right option.
We’re continually evolving
Brokers are incredibly important to us with around 95% of our business coming through intermediaries. Our award-winning team of BDMs cover the whole of the UK are always listening to your feedback. We’re continually evolving to make our offering more competitive and accessible.
Over the past few months, we’ve changed our approach to stress rates to make affordability assessments better tailored to your clients. Borrowing capacity is likely to increase by up to 13% for Interest-Only and up to 9% for Repayment applications.
We’ve also changed the way we assess Interest-Only applications which have no associated cost to the repayment strategy (such as downsizing or the sale of another property). Assessments are now carried out on a purely Interest-Only calculation regardless of the term length, improving affordability especially for those longer-term applications.
Tailored credit checks and common sense
The high street generally relies on credit scoring, but later life borrowers don’t score the same way as younger ones do. Pensions usually aren’t treated as a salary, and many older clients have paid off loans or credit cards. That’s where lenders who manually underwrite can help, using common sense to make a lending decision. The mutual sector understands later life lending and has the ability to treat customers as individuals.
At Family Building Society, we offer tailored credit checks and underwrite each case manually so that each application is considered on its own merit. We’re experienced in the grey and can consider complicated income streams which is so often the case in later life.
We’ll consider a wide range of earned and passive income(s) and assess affordability using not just traditional state or fixed pensions, but also modern pension pots like drawdown, SIPP, and SSAS. Uniquely, your clients do not need to be actively drawing from these pots to qualify, helping them to avoid unnecessary tax liabilities.
For example, with a £500,000 drawdown pension pot and a 10-year term, we can use up to 90% of the value, counting £45,000 per year as income. For shorter terms, well use 80% of the pot, divided by as few as five years—yielding £80,000 per year in this example.
The same flexible approach applies to other investments (like ISAs and bonds). This is far more generous than the industry norm, which typically uses only 3–5% of the pension or investment value and requires the funds to be drawn.
Our criteria
- We consider earned income up to the age of 70, or even 75 if the client is in a non-manual role.
- Other income can be considered on a case-by-case basis, such as:
– Up to 90% of investments or pension pots (divided by the mortgage term)
– State and private pensions
– Rental income
– Stocks and shares ISAs
– Remuneration drawn by limited company directors (where the applicant is not actively running the day-to-day business operation). - We lend in retirement with higher maximum ages than most lenders:
– Owner Occupier repayment mortgages, up to a maximum age of 95 at the end of term
– Owner Occupier Interest-Only and Buy to Let mortgages, up to a maximum age of 89 when the loan commences. - We have a common-sense approach to lending and use human beings, not robots, to underwrite each case. This means we can tailor our solutions to each of your clients’ needs.
- Award-winning BDMs. We were delighted to win ‘Best BDM Team’ at the Moneyfacts Awards this year, which reflects the commitment, expertise and day-to-day support our BDMs bring to every broker relationship.
With our manual underwriting approach, award-winning team of local Business Development Managers, generous lending criteria and innovative products – we strive to find a way to lend to your clients.
We take great pride in how we do things, and it works.
*https://theintermediary.co.uk/2025/06/later-life-lending-up-33-in-q1-2025-uk-finance/
Come and talk to us
Our approach can be delightfully unexpected. We take great pride in the how we do things, and it works. Speak to one of our team of award-winning BDMs, to find out how we can say ‘yes’ to your clients.
To contact our Mortgage Desk or your local BDM,
CALL US ON: 01372 744155
OR EMAIL: mortgage.desk@familybsoc.co.uk
| FAMILY BUILDING SOCIETY, EBBISHAM HOUSE, 30 CHURCH ST, EPSOM, SURREY KT17 4NL Family Building Society is a trading name of National Counties Building Society which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. National Counties is on the Financial Services Register Firm Reference Number 206080. |
