Halifax is set to loosen its lending into retirement criteria by relaxing the way it treats income.
Now, Halifax uses earned income for affordability up to the state pension age, then relies on pensions or other retirement income beyond that, up to a maximum age of 75.
The current maximum state pension age is 65, for someone retiring now. This will increase to 67 between 2026 and 2028. Beyond that the pension will be based on life expectancy. The state pension age is reviewed every parliament.
The state pension age is 65 for men and almost 63 for women. Both men and women will get their state pension at 65 in 2018, and at 66 by 2020.
From Monday, Halifax will use earned income for affordability up to 70.
If the mortgage term goes past 70, or the borrower’s state pension age, whichever is sooner, Halifax will continue using ‘verifiable anticipated retirement income’ in its affordability assessment.
The maximum age at the end of the term remains 75.
The broker note says: “An increasing number of people are working beyond their state pension age and to reflect your clients’ needs we are amending our lending into retirement policy.”
Lentune Mortgage Consultancy managing director Stuart Gregory says: “It’s a positive move from Halifax which then brings them into line with other lenders who view borrowers in the same vein when they plan to work beyond state retirement age. Such movement should be replicated across all lenders.”
L&C Mortgages associate director David Hollingworth says: “It’s a shame Halifax haven’t taken the opportunity to push on a little bit. Unless things change with the major lenders, older borrowers will find themselves as somehting of a niche.”