There were 306 retirement interest-only mortgages advanced in Q3 last year
The mortgage industry in the UK is facing a significant and growing challenge – and it’s coming in the form of ageism. Despite an ageing population and more homeowners opting to purchase later in life, there’s a lack of comprehensive advice for borrowers aged 55 and over.
According to UK Finance, there were 33,840 new loans given to older borrowers in 2024 – a rise of 2% year on year. What’s more, there were 306 retirement interest-only mortgages advanced in Q3. With so much interest in later life mortgages, why is there a staggering lack of education around these loans in the UK mortgage market?
According to Malcolm Davidson, managing director of UK Moneyman, and Dan Osman (pictured), head of Age 50+ Mortgages, too many mortgage advisors are either unwilling or unqualified to serve this crucial demographic.
"One of the things that drove us was the Financial Conduct Authority (FCA) report that found that by the time older people seek advice, they’ve already been convinced by marketing that equity release is the only option available to them," said Davidson. "We came up with this mantra: ‘So equity release is the answer – but what was your question again?’ The whole industry is built around these high fee-paying products, but they’re not the only solution."
The reality is that over-55 borrowers have far more options than they may realise, from standard mortgages with high street lenders to local authority grants and charity funding. However, many advisors are not equipped to offer this holistic advice.
"If you don’t have knowledge across a wide range of products, how can you know whether the client might get a better deal elsewhere?" Osman said.
A shortage of specialists?
Despite there being around 22,000 mortgage advisors in the UK, only about 7,000 are qualified to advise on later life lending.
"But of those, only a few hundred are true specialists in later life lending,” Davidson said. “Many advisors within networks are nervous about offering later life advice because they only do one or two equity release deals a year. It has become a specialism, and if you’re not an expert, you risk giving poor advice."
That lack of expertise has led to an over-reliance on equity release, sometimes at the expense of other, better options. And Osman pinpointed a key issue: "A lot of firms take a completely siloed approach – ‘we do equity release and nothing else’ – so that’s the first and only option considered. But there are plenty of cheaper, more suitable solutions out there. The problem is, many advisors just don’t know about them."
Challenges facing older borrowers
Another reason why the industry needs to evolve is that the profile of borrowers over 55 is changing.
“The old stereotype of someone in their 70s unlocking equity to go on a cruise just isn’t the case anymore," Davidson told Mortgage Introducer. "People are coming to us for advice much younger, like 55 and above. They’ve got mortgages running to state retirement age and beyond, and they’re carrying personal loans and debts into retirement. They’re part of what’s called ‘the squeezed middle’ – still supporting elderly parents while helping their children get onto the property ladder.
"They’re too young for an equity release, but they don’t quite pass affordability tests for standard mortgages either. The industry is starting to innovate here, but there’s still a long way to go."
Is the mortgage industry reluctant to change?
Despite the clear need, many firms remain reluctant to step into this space. One reason is fear.
"Networks are nervous," Davidson said. "They worry about disinherited family members coming back in 20 years, saying their parents didn’t fully understand what they were signing up for. That’s a risk, and it’s not an easy one to police."
And then there’s also the issue of complexity. According to Osman, later life lending is nuanced, meaning they have to deal with issues like the impact on means-tested benefits and property conditions like spray foam insulation that can affect eligibility – all of which takes an investment of time.
“Or even the fact that a widow might not have been aware her late husband still had a mortgage,” Osman said. “It’s a very different skill set from advising a first-time buyer."
The problem is exacerbated by the fact that most mortgage brokers now operate as one- or two-person businesses.
"It’s a lonely gig," Davidson said. "If you’re working from home with no access to experienced colleagues, you’re much less likely to take on later-life cases. You’re afraid of getting it wrong."
A call for change
Davidson and Osman believe that the solution lies in a more integrated, mentorship-based approach.
"We need to upskill mortgage advisors, not just add more equity release specialists," Davidson said. "That’s why we’ve taken the approach of training our mortgage advisors to offer a full range of later life solutions. We look at every standard option first – only then do we consider lifetime mortgages."
And Osman agrees. He told Mortgage Introducer that peer-supported learning is crucial.
“I was lucky to have fantastic mentors, and now I act as a mentor myself. But most brokers don’t have access to that kind of support. That needs to change," he said.
There is also an opportunity for lenders to step up. "Right now, there’s a gap in the market," Davidson said. "Smaller building societies, in particular, could offer more flexible solutions for later life borrowers. The high street banks want easy-to-process cases, but later life lending is complex – it requires a human touch."
The future of later-life ending
With the population ageing and financial pressures increasing, the demand for quality later life mortgage advice will only grow.
"We’re already at a tipping point," Davidson said. "More and more standard mortgage brokers are dealing with older clients, but they don’t have the knowledge to help them properly. That’s bad for the industry, and it’s bad for consumers.
“Treat it like any other mortgage. Whether it’s equity release, a retirement interest-only mortgage, or a standard loan, at the end of the day, it’s just a mortgage. Our job is to help clients find the best one for them."
The question is, will the industry step up before the gap becomes a crisis?
