Later Life Servicing Options

12 June 2019

By Richard Pike, sales and marketing director, Phoebus Software Ltd

In 2015, the Council of Mortgage Lenders found that only a third of mortgages taken out back then would run beyond the borrowers’ 65th birthday, and that less than 1% of new lending was to those aged over 65.

This was at a time when the average age of a first-time buyer was 37, meaning a 25 year mortgage would be repaid at aged 62. Clearly, first time buyers will move, refinance, get divorced, etc, over the years, and so it was always inevitable that a “maximum term limit” of age 65 would not be sustainable as time went on. And why does it need to be when many other countries around the world have successfully funded lending into retirement in many guises for many years?

Roll on to 2019, and we have a very healthy market accepting of the fact that lending past retirement age is a standard requirement and many borrowers are taking advantage of this new flexibility. The equity release market continues to thrive, very much supported by retirement interest only (RIO) products. However, more traditional products features, such as the requirement for regular mortgage repayments, require different illustration and servicing requirements than traditional lifetime products.

We see many tenders in the market place for new originations platforms, but it is also hugely important to re-evaluate account servicing capabilities as well. This is because many of the new features required will not be catered for in traditional, equity release servicing systems. There are equity release incumbents that have multi-billion pound books being serviced on legacy technology. The time is probably right to consider the efficiencies of looking at new servicing platforms with proven scalability and migration capability that can also deal with more standard servicing requirements such as payment collections, arrears management and repossessions.

A servicing platform should include an API framework allowing data to move between other third party platforms such as the originations or document management solutions. The cost efficiencies will be undoubtedly be substantial and return on investment therefore more than recoverable.

The later life lending sector is only going to expand as more funding comes to market to meet customer requirements, and products will continue to diversify in terms of characteristics and features.  Although the market rightly continues to consider the user experience in the sales process, focus should also be given to how new products will be serviced once a case is completed.

Media contact

Debbie Staveley
Director and Owner,
bClear Communications

+44 (0)1275 542 511


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