It’s a decade since reader EF’s husband died. He used to sort out all the finances, so she asked her children to help since his death.
It has been a weight off her mind and now, at 91, this Moneywise reader of Sevenoaks, in Kent, can count her blessings. She is reasonably active and still living in her cherished family home.
EF’s late husband took out an interest-only mortgage some years ago, but she could comfortably meet the repayments so all was good.
Or so she thought. But last month, she got a shock letter from her bank.
The letter from Barclays demanded the repayment of £180,000 by March 2019. It was the full amount of the interest-only mortgage, and the demand was the first EF had heard of any repayment deadline.
She turned to her daughter SF who, after several frustrating false starts trying to sort things out over the telephone and online, finally got some sense from staff at a local branch.
But it wasn’t good news. “They told me that because of mum’s age, Barclays hasn’t got another mortgage product for her.”
In fact, Barclays’s standard policy is to only lend to people up to the age of 70 or their retirement age. That doesn’t mean it will lend to 70-year-olds – it’s much harsher than that.
The bank will only arrange lending up until a customer’s 70th birthday. That means a 65-year-old would only be granted, at best, a loan lasting five years. And that would only be the case if they hadn’t yet retired.
EF and her husband had been granted a longer-lasting loan 20 years ago by the Woolwich, before it was taken over by Barclays and before new stricter age limits were introduced.
SF contacted Moneywise asking for help.
“Has anyone else found themselves in a similar position at an elderly age?” she asks.
The simple answer is yes and, in the future more older people could find themselves facing problems.
That’s because most of the big high street banks have introduced much stricter lending policies and slashed age limits.
Anyone with an interest-only mortgage with a bank could be faced with the same stark demand: pay up!
SF also asks: “What are my mother’s options?”
She would like to have the mortgage extended. She can still afford to meet the repayments and with the loan just less than one-eighth of the value of the home, there is little risk to the lender.
But if the bank insists on having its money, she would have to sell the property and move out of her family home. That’s an option she doesn’t want to consider.
The good news is that there is a whole raft of lenders that might be happy to take on the loan.
There are 14 building societies that have no upper age limit at all. That is because they can take an individual decision about lending and use common sense.
If someone can afford to repay the loan and there is plenty of security – as there will be with a property that has climbed in price over the years – then sensible lenders should be glad to have a new customer.
Even lenders with a high upper age limit are likely to look beneficially on a new borrower such as EF.
I spoke to challenger bank Aldermore, for instance. It has an upper age limit of 99, but says it is likely to extend loans beyond that for people who still have a decent enough income to afford repayments.
SF will explore these different options with her mother. But she’s also appealed to Barclays’s chief executive office to get them to rethink its negative decision, as staying with the same lender could well be the best option.
Barclays told me: “This case is currently being investigated as a priority.”
“There are 14 building societies that have no upper age limit at all”
Fingers crossed that the bank takes a common-sense approach, especially as it appears the customer was surprised by the impending debt demand, causing much distress.
Even if it doesn’t extend the mortgage, EF should be able to get a loan elsewhere.
But the warning is clear for other older interest-only borrowers – you could be sleep-walking into problems, which means it is sensible to prepare now.
The best solution would be to start making payments on the mortgage, or saving the money elsewhere, so you can pay the loan off when it falls due.
You can find out more about which building societies may be able to help older lenders at Bsa.org.uk/information/consumer-factsheets/mortgages/building-societies-lending-age-limits.
OUTCOME: Barclays is investigating this case ‘as a priority’
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