"They must work with their clients to fully understand their ongoing financial goals, their attitudes towards debt, and their long-term plans, at all stages of life, and may need to be considering later life lending options far earlier."
In the past, if you talked about later life borrowing, it would be presumed you were talking about a much older customer base well into retirement, one which wasn’t able, or was perhaps unwilling, to pay anything towards any loans, and one which had access to a very different set of products far removed from the mainstream mortgage market.
However, none of the above is now true, and while there are of course customers who fit into the ‘segments’ mentioned above, we also have a situation which can differ greatly from that.
Later life lending options can now be accessed by borrowers from aged 50, many borrowers do want to keep paying some or all of the interest plus make capital payments, product choices span from mainstream mortgage options for older borrowers to lifetime mortgages, with plenty of options in between.
Therefore, in an advice sense, there is much more to consider, and many more options to be able to access that can fit a whole range of customers with very different needs. It’s why we believe many more advisers need to be engaged across both the mainstream and later life spaces in order to make sure they are not missing out on a potential option for the client.
The ‘Master Later Life Lending’ podcast, which I host, recently explored this topic in depth, with some excellent insights from Colin Bell of Perenna and Emma Graham of Hodge. The discussion underscored the importance of advisers having comprehensive conversations to guide their over-50 clients through the maze of options available to them.
One of the key points discussed in the podcast was the changing financial landscape for borrowers over 50. As life expectancies increase and retirement ages rise, not only do more people have mortgage debt they carry further into later life, but they also want to utilise what tends to be their main asset, their property, in different ways. They want to unlock the equity in their homes to fund their retirement, support their children, or simply enhance their quality of life.
As Colin mentioned in the podcast, “The mortgage is now becoming a tool. It’s a tool to get you on the property ladder when you’re young, but also a tool you can dip into through the whole of your life.” This mindset shift is crucial for both advisers and borrowers, and it’s one that can only be achieved through comprehensive, advice-led conversations.
What we also need to do however, as Colin pointed out, is understand the different needs and priorities of these borrowers which can vary widely. “There’s a real polarisation now between the psychology of borrowers at different ages,” he said.
Borrowers who are now in their 40s or 50s, he noted, are often more comfortable with carrying debt throughout the rest of their lives, while much older individuals may be more cautious having been focused on paying off their mortgages as quickly as possible. Both however may well need later life lending options.
What this divergence in attitudes towards debt does mean however is that advisers must be particularly attuned to the individual circumstances of their clients. A one-size-fits-all approach simply won’t work. Instead, they must work with their clients to fully understand their ongoing financial goals, their attitudes towards debt, and their long-term plans, at all stages of life, and may need to be considering later life lending options far earlier.
This is partly why Air launched its ‘Comprehensive Conversations’ campaign and urges advisers to use ‘Safer Tracks’ to steer these borrowers towards the right solution and outcome.
A comprehensive conversation is one that goes beyond the basic questions of income, expenses, and credit history. It involves a deeper exploration of the client’s financial situation, including their long-term goals, their forthcoming or existing retirement plans, and their attitudes towards risk and debt. It also requires a thorough understanding of the various mortgage products available to older borrowers, from traditional lifetime mortgages to more innovative products like Partial Term Lifetime Mortgage or RIOs.
As Emma explained in the podcast, comprehensive conversations is about being relational rather than transactional. “It’s knowing your customers really well, asking those questions, listening, and just being more insightful and perceptive as to the challenges that over 50s borrowers are experiencing today,” she said.
This relational approach is particularly important when advising borrowers, who may have complex financial situations and deeply ingrained attitudes towards debt. For example, a borrower in their 60s may be more concerned about leaving a financial legacy for their children than about maximizing their own spending power in retirement.
For advisers, implementing a strategy of comprehensive conversations requires both sector engagement, training, access to product solutions either via themselves or via referrals and relationships, and a willingness to engage with clients on a deeper level. Fortunately, there are many resources available via Air to help advisers develop these skills, as there are via lenders such as Hodge and Perenna.
Ultimately, the key to success in advising over-50s borrowers lies in the ability to listen, to understand, and to offer tailored advice that meets the unique needs of each client. By embracing comprehensive conversations, advisers can not only better serve their clients, access the entire product offering and get the right outcome, but they can also build a significant, potentially new and stronger income stream for their business.
