Later life lending: Mutuals lead as market grows

This article was produced in partnership with Family Building Society

In the second quarter of 2025, 33,130 new loans were advanced to older borrowers—a 0.49% year-on-year increase. The total value reached £5.2 billion, up 3% from the same period last year. What does this mean for brokers?

“Build the relationships and the confidence to eat up the opportunity in the later life lending space,” says Georgina England, Business Development Manager at Family Building Society. “These numbers show us the later life market is absolutely still there — in fact, it’s growing. Don’t be afraid of it.”

Equity release or RIO: The false dichotomy

Senior Account Director at Family Building Society, Paul Roberts, notes a persistent industry stereotype: that later life lending must be either equity release or a Retirement Interest-Only (RIO) product.

“That’s not the case at all,” he stresses, adding that he’s still working on educating brokers on the fact that a mainstream loan is available to people far later in life than many consider, without having to go down the equity release route. He also fields many a phone call from brokers asking after a RIO.

“When somebody rings me for a RIO for a client aged 60 years of age, the first question I always ask is: why?” Roberts explains. “It’s a very narrow product.”

While a RIO has its place, it requires a death test that makes affordability very low — and in many cases this means the client can’t get the borrowing they need anyway. Family Building Society offers a two- or five-year fixed rate product, either Interest Only (IO) or a capital repayment mortgage depending on what’s best for the client. Importantly, those are standard products.

“We don't charge differently based on age,” England notes. “They could be 89 or 18; the same criteria and rate apply.”

A standard mortgage can serve as a stepping stone before equity release. Roberts notes that the industry has unfairly maligned the IO option: “It became a dirty word a number of years ago,” he says. “But it can be a perfect fit for the right customers—and later life clients often fit that bill.”

Why mutuals stand head-and-shoulders above the High Street

A common scenario that Family Building Society sees is a client ranging from 65-80 who has reached the end of their term and the High Street wants their money back. But the client isn’t ready to downsize or repay that mortgage. Perhaps their four-bedroom house is filled with grandchildren on the weekends, and they’d prefer to stay put longer than they originally anticipated.

Because they’re retired, the High Street doesn't want that type of client; but mutual building societies actively seek them out, England says. It’s a growing market because while the UK has an aging population, people are staying healthier and active for longer as well.

“The High Street haven’t quite got their heads around later life lending,” Roberts says, noting they focus on younger and middle-aged borrowers who are seen as a better risk.

Big banks rely on credit scoring, but later life borrowers don’t score the same way as younger couples. Pensions aren’t a salary, and many older clients have paid off loans or credit cards.

But Roberts argues a later life borrower is one of the best risks to lend to because they’re usually incredibly stable. A lender like Family Building Society recognizes that.

“The mutual sector understands later life lending. Absolutely understands it. We treat customers as individuals.”

This isn’t just a theory for Roberts. He’s had many brokers who have become clients themselves as they’ve reached retirement and looked for a mortgage in later life. He’s done more mortgages for his own brokers during his 14 years at Family Building Society than he’s done at any other lender - a testimony to the attractive criteria the Society offers and the relationships he’s built up..

While brokers are realising that there’s a growing segment of the industry that needs support and invariably find their way over to mutuals with their older clients, Roberts and England urge more education — and determination.

“It's too easy to just go after the first-time buyers and the remortgage,” England says. “Later life lending does need a bit more thought, but it’s a very big part of the market that’s only getting larger.”

Family Building Society’s robust approach to later life lending

Family Building Society was one of the first mutuals to do later life lending and it’s not a stretch to say they love it. It can be daunting if a broker is used to looking at P60s, payslips and SA302s, but most mutuals have dedicated, in-person BDMs to assist. Family Building Society offers an even more robust approach.

“Our underwriters live and breathe pension and investment paperwork and our BDMs are industry experts,” England says. “Where a broker might need more support, we are equipped to hand hold them through the process.”

Family Building Society stands apart with their tailored credit checks (as opposed to rigid credit-scoring) and their willingness to lend up to age 89, as well as the income streams the lender considers. They assess affordability using not just traditional state or fixed pensions, but also modern pension pots like drawdown, SIP, and SASS. Uniquely, borrowers don’t need to be actively drawing from these pots to qualify, helping them to avoid unnecessary tax liabilities.

For example, with a £500,000 drawdown pension pot and a 10-year term, the lender can use up to 90% of the value, counting £45,000 per year as income. For shorter terms, they use 80% of the pot, divided by as few as five years—yielding £80,000 per year in this example.

The same flexible approach applies to other investments (like ISAs and bonds). This is far more generous than the industry norm, which typically uses only 3–5% of the pension or investment value and requires the funds to be drawn.

Family Building Society also offers direct contact with underwriting managers. BDMs can discuss cases with decision-makers holding the highest mandate, providing brokers with added certainty.

“As long as the case comes in exactly as they’ve communicated, we can get a pre-agreement in place that gives extra certainty: it’s signed, sealed, and will be delivered,” England explains. “It’s important brokers understand the different lenders, the products, and what support is offered. What Family Building Society provides is a significant benefit to older clients and for more complex cases as well.”

Everyone’s got an aging client book — find out how to manage it

From its Education Hub to its knowledgeable BDMs, Family Building Society is a leader in later life lending. The key advice for brokers: don’t miss out on this growing segment just because these cases require a bit more effort.

“I’ve talked to new brokers who see a later life client and panic because they don’t know how to place the case or who would look at it,” England says. “There are a lot of lenders here to help with this growing area of the market — including Family Building Society. Seek out the best lenders, get to know their BDMs, and get comfortable with later life lending. Everyone’s got an aging client book, whether you want them or not.”