Introducing our new Retirement Mortgage service

Introducing our new Retirement Mortgage service

"I know from talking to our clients that the flexibility offered by the new service is something they've been looking for"

Samantha Dunne, Banking Director
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While several private banks shut their doors to new business during lockdown, our team at Hampden & Co continued to work as normal, supporting existing clients and welcoming new ones. Now, as Banking Director Samantha Dunne reveals, we’ve launched a Retirement Mortgage service to help clients enjoy greater financial flexibility during their later years.

Retirement should not be a barrier to getting a mortgage

Albert Einstein understood the freedom that we should be able to enjoy as we grow older. “I have reached an age where if someone tells me to wear socks, I don’t have to,” he once said. Yet for many people exploring mortgage options in their later years, the freedom and flexibility of what’s on offer isn’t really up to scratch.

There are of course several reasons why relatively wealthy people might seek a mortgage during retirement. For instance, they may wish to realise a lump sum of cash without disturbing other assets and investments – perhaps to provide some financial help to their children or grandchildren, or as part of their estate and inheritance tax planning.

Yet many retired people fall outside the algorithm-driven lending specifications of the mainstream banks, perhaps because they retired at a later age or because their income sources don’t fit the tick-box format of digital applications.

The banking industry as a whole has a job to do here. According to the most recent figures from the Office for National Statistics, retirees now account for 18% of the 65.6 million UK population – that’s nearly 12 million people, and the figure continues to rise. The FCA is encouraging lenders to provide greater flexibility to retirees seeking mortgages, but there is still a way to go.

Helping borrowers in their later years

At Hampden & Co, we already lend to a number of clients over the age of 70 on the basis that their income, whether it be from earnings, investments or retirement/pension income, is sufficient to meet the affordability of the loans. However, we have now also launched a Retirement Mortgage service that allows clients aged 55 and over to borrow against their home for an indefinite term. Only interest on the mortgage is paid monthly, and the capital is repaid when they sell the property, or when the last surviving borrower moves into long-term residential care or passes away.

I know from talking to our clients that the flexibility offered by this new service is something they’ve been looking for. It allows them to release equity from their home without taking an equity release loan where the cost of interest rolls up, therefore reducing the equity in their property to be passed on. The Retirement Mortgage ensures that the amount of capital outstanding remains the same for the term of the loan. However, there is also an opportunity for clients to make capital reductions if they wish, meaning that equity in the property can be passed on as an inheritance or to meet the costs of long-term care.

This flexibility enables clients to help children or grandchildren clamber onto the property ladder, make home renovations to suit their retirement lifestyle, or fund other plans, such as travel adventures.

Business as usual, despite lockdown

Of course, travel plans for most have been disrupted this year by the COVID-19 crisis, and some parts of the financial services sector have struggled to cope with the effects of the crisis too. Indeed, some lenders closed their doors to new business during lockdown.

We took the opposite approach at Hampden & Co. Everyone was able to work as normal from home, and all clients were personally contacted to reassure them that we remained very much available to them. Furthermore, far from reining in our services, we continued to welcome new clients, and look forward to welcoming more with the launch of the Retirement Mortgage.

I love working with our clients, getting to know them personally and understanding the full picture of their aspirations and finances so that we can help them in ways that other lenders wouldn’t take the trouble to. This is particularly useful for clients who may have complicated finances, and it often leads to us looking after several generations of a family, young and old.

The actress Ingrid Bergman once compared growing older to climbing a mountain. “You’re a little bit out of breath but the view is better,” she said. Our Retirement Mortgage solution is just one way that we can help with that view.

Samantha is a banking director with over 30 years’ experience. She started her career with Child & Co in 1989 before joining RBS Corporate and Commercial in 1998. In 2004 she joined Adam & Company as Associate Director. She holds an ACIB Certificate in Financial Services and Certificate in Mortgage Advice & Practice. Samantha joined Hampden & Co in 2014.