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Pass the crystal ball.

When my wife’s grandfather decided to retire, he decided to spend some of his savings to stock his not so unsubstantial farmhouse cellar with what he calculated to be enough wine to see him through to quite literally, his wake.

Being in his 70s, a devotee of his first G&T at 11am and a sixty a day man, you would have thought that he could have commanded top dollar from any annuity company willing to take the pot he used to purchase his wine and translate that into a regular, if short term, income. Added to the fact that he was a surviving Battle of Britain pilot and you could argue that he had used up a fair proportion of his allocated nine cats lives.

Not so. He survived into his 90’s and with all of the wine long gone, it just goes to show that the saying ‘life happens when you are making plans’ has a certain truth about it.

So wouldn’t it be great, if a somewhat dull existence, if we all had a crystal ball and could map out in detail our future financial needs? This is precisely the issue that those over the retirement age need to consider when the need for some perfectly legitimate and affordable reason to take out a mortgage that may not be paid off until they are in their 80s.

Of course, there are a lot of sensible questions that a retired borrower should ask his or herself, and be asked by the lender.  What happens if my partner passes away? What if my partner needs permanent care? What if I need to make major repairs to my house? Should I tell my children what I am doing? Should it be a capital repayment or interest only loan and if so what are the plans to pay it off? Pension couple picture

Difficult questions maybe, but not in our eyes, questions that cannot be answered by careful planning, understanding of an applicant’s needs, and an open dialogue between all parties that fully understands and appreciates personal circumstances. It’s called underwriting. And in our case, it takes a bit longer, doesn’t involve a computer and uses a modicum of common sense.

That’s why the majority of lenders aren’t keen on older borrowers and why they tend to run for hills when asked about it. Try it. Walk into a high street bank and say that you want a mortgage that you will eventually pay off when you are 75 or older and, in all likelihood when the assistant stops laughing, calls for security and you find yourself gently shooed away, you will see what I mean.

But it doesn’t have to be that way. While the recent pension reforms may have added an extra layer of freedom to the financial landscape, with careful planning and a full appreciation of all the facts, lending into retirement is a perfectly feasible and sensible option for some.

By Alistair Nimmo

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Family Building Society
Ebbisham House
30 Church Street
Surrey KT17 4NL
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