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Older borrowers win victory in landmark mortgage case

Written by Sam Jones on 03 June 2015.

We are delighted to see mortgage lenders being forced to change their lending criteria when discriminating on age.

In recent years a number of lenders have started to cut back on lending into retirement and setting maximum ages for mortgages as low as 65.

It means some people in their forties would be turned down for a mortgage based purely on their age and nothing else.

Lenders say older borrowers are riskier ad under tough new mortgage rules they must ask harder questions to make sure everyone can pay back the loan.

But mortgage experts have long criticised the moves as discriminatory that are ageist and unfair.

We have seen a number of clients badly affected by this unfair trend and have long argued with lenders that they should change their stance.

Many older borrowers are some of the most prudent and astute around and we believe it is in lenders interest to lend to these good borrowers.

That is why it was such a pleasure to read that the Financial Ombudsman Service – the complaints watchdog for the financial services industry – laid down the law to HSBC.

After years of these unfair policies one plucky couple complained to the ombudsman about their applications.

The couple were only in their forties and said they were turned down for a £250,000 interest-only mortgage over an 18 year term.

HSBC said they were too old and could not take out a mortgage. But in a landmark ruling the ombudsman said the application was unfairly rejected on that basis and must be reconsidered.

The bank said the husband would be over 65 by the time the mortgage was paid off and so it would not proceed with the applications.

The ombudsman said the banks had made “untested assumptions, stereotypes and generalisations” based on age.

It slammed the bank’s “inadequate” and flawed systems that allowed it to apply such an unfair and sweeping policy.

HSBC said it must consider all factors affecting interest-only loans but it will pay £500 compensation and look again at the case.

It was a victory for campaigners such as Age UK and many mortgage borrowers who have argues against such discriminatory cases.

As society gets older and more people rent for longer the trend is for people to take out mortgages at a later date.

If you are in your 40s or 50s looking for a mortgage then this case should give you hope as it could change lender behaviour.

We deal with many clients frustrated by these actions but if you take the right advice and apply in the right way then doors can open.

We believe older borrowers should have the same opportunities as anyone else as there could be many circumstances where a mortgage is appropriate beyond 65.

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