Legal News
Parents now turning to children for mortgage help (19 May 2015)
Date: 19/05/2015
A survey by the National Association of Estate Agents has revealed that one-third of estate agents have witnessed older borrowers being subjected to age discrimination and being refused a home loan.
The Daily Mail reports that more parents over the age of 50 are now asking their children to act as guarantors to a mortgage because they are not able to qualify for a home loan as a result of their age.
Lisa Harris – a spokeswoman for retirement specialists Saga – said the rules on lending needed “urgent review”.
Mortgage experts say that parents are being forced to “demean themselves” and ask their children to act as guarantors because banks are refusing to approve mortgage which extend into retirement years – as a guarantor, a child would agree to pay any arrears if their parents defaulted on mortgage repayments.
Even parents with a reliable income from a pension have been turned down for home loans – prompting claims that lenders are misinterpreting the rules on lending.
Ray Boulger from mortgage broker John Charcol said:
“Often we find that the parent can actually afford the mortgage – but the lender will not take their income into account simply because of age.”
However, banks have countered the claim that they are misinterpreting the rules – saying that lending into retirement is a “real concern” and that they “need clarity” on who they can lend to. Tougher criteria for lending were introduced in April 2014 over concern from the Bank of England that some borrowers were over-extending themselves financially to take advantage of the coalition government’s Help to Buy upper limit of £600,000 for properties bought under the scheme.
Help to Buy was more popular outside London than in the capital, where the average price of a home is now around the £500,000 mark, meaning homebuyers on low to middle incomes might still struggle to find an affordable home to buy.
Re-mortgaging has also seen a peak in recent years, as families decide to refurbish or extend a current home, rather than try and move to a larger property as a result of the shortage in housing across the UK.
Older homeowners may also have considerable equity to release if they have stayed in the family home for decades.
In some cases, parents have also had to finance their children to help them get on the property ladder because of escalating prices in property across Britain.
Some older homeowners wishing to re-mortgage have been turned down because of their age, however.
Duncan Lewis Housing Solicitors
Duncan Lewis is a leading firm of housing solicitors able to advise homeowners and homebuyers on a wide range of housing matters – including debt management and mortgage repossession.
Duncan Lewis also offers competitively priced conveyancing services and can guide first-time buyers through the conveyancing process.
There are Duncan Lewis offices nationwide and Duncan Lewis is also a leading firm of Legal Aid solicitors.
For expert help with housing law and conveyancing, call Duncan Lewis housing solicitors on 020 7923 4020.