Middle Aged Lending

Many of us have heard of the title “Later Life Lending” with the needs of raising equity or boosting finance way into retirement but have you heard the phrase “Middle-Aged Lending”?

Who you determine as middle-aged is entirely up to you, you might offend your customer with this title. Many bought property and sold a few times during the 1980’s and 1990’s and have enjoyed rapid house price growth.  They also have high outgoings; many still have mortgages, some interest-only with little or no repayment vehicle. They’re all still working and earning good income in stable careers.

Their needs are varied, but there are some common threads:

BOMAD – Bank of Mum and Dad. Many of this age group have children who have grown up, now in their early twenties and maybe looking to get onto the housing market for the first time. They’ve heard all the stories over Sunday lunch countless times on how lucky their parents were with their housing purchasing and how much money 23 Acacia Avenue is now worth.

They can help their children in a number of ways:

  • Raising capital via remortgage or further advance on their own property to gift outright or to lend to them with strict repayment criteria. Surveys show they want their money back.
  • Helping their children by being a guarantor on a high percentage loan mortgage.
  • Providing a surety to enable their child to borrow in their own name. A surety is a lump sum deposited with the lender. They’re back in fashion, just look at the Halifax’s latest product on the TV.
  • Buy a house to rent to their Uni children. Second-home charges come in here plus extra Stamp Duty and CGT
  • Jointly buying via a Joint Borrower Sole Proprietor mortgage. This way the child is the house owner. You'll have to do some proving to your solicitor to claim first-time buyer Stamp Duty.
  • Remortgaging to pay off their child’s Government Help to Buy loan which has passed the 5 year anniversary

According to Legal and General’s survey in 2018, BOMAD is the 11th biggest lender and loans out £5.7 billion to their children. A healthy sum.

Another need of this age group might be to find ways to repay their interest-only mortgage if they don’t have a repayment vehicle. RIOs rear their heads. Retirement Interest Only Mortgages. Called retirement not because they are sold to those retired but because the loan continues throughout retirement and is repaid on death.

If they’re in the market for a standard homeowners new mortgage, they may be wishing to keep the payments down by borrowing over a long term. Lenders are very happy to lend into retirement on a normal repayment mortgage. Ask my lender, they granted me a 24-year mortgage term to age 80.

If you feel you can work with this age demographic, then you’ll want to get your personal marketing engine revved up to find them. Prospect and personally market to this age group. Seek referrals from clients specifically people in this age band, promote your business at golf clubs, association meeting areas, Facebook groups, leaflet drops in suburbs where you feel this age group live.  Promote in sports club brochures which cater for them. Anywhere where they “hang out”. Referrals or existing client banks are the best way to market.

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