Jun 10, 2013 Simon Williams
The Great Recession and its subsequent sluggish aftermath has left many people from all walks of life reeling in the United Kingdom. Older individuals with steady jobs and younger people fresh out of a university alike have been left in financial ruin, clocking poor credit scores and amassing large amounts of debt.
Many of these consumers found that, even when the economy began its slow climb back to pre-Recession levels, they still struggled. Not only do a number of these affected people have to amend old debts and pay off overdue accounts, but they largely can't get a loan. Traditional banks are still relatively weary to dole out loans to anyone who isn't far above the sub-prime level, and the individuals themselves simply don't have good credit scores anymore.
Many industry experts in the U.K. are calling for lenders to reopen their doors to people in multiple demographics, so that they can access the funding they need to make ends meet temporarily, and so the companies themselves can see more business to further jump-start the economy.
Older borrowers facing a complicated lending landscape
According to Mortgage Introducer, many in the country are asking lending businesses to target older borrowers specifically, as they've had a particularly tough time in recent years. The news source said that their biggest pain point is in obtaining a mortgage, and detailed that every year between 2017 and 2032, around 40,000 households comprised of individuals more than 65 years old will have interest-only mortgages. That number will rise within the 50- to 64-year-old bracket as well.
This presents a major problem, given the lending trends in the U.K. Companies aren't giving out money to anyone who's not a sure thing, and older people who have reached retirement age are stymied on how they're going to pay a mortgage directly out of pocket without any additional help. Moreover, many traditional lenders have limits on the ages of consumers they can lend to.
"We call on banks and building societies to lift their arbitrary age limits on loans, which unjustifiably prevent many older people who could afford a mortgage from extending the term of their loan," Age UK charity director Michelle Mitchell told Mortgage introducer. "Decisions on lending should be based on whether an individual is able to repay a loan, not on an outdated vision of what it means to be older."
Other options available
Even if large lending corporations and other financial institutions don't tweak their borrowing requirements, there is still hope for those who need to make ends meet in the U.K. For instance, alternative finance firms might provide a lot of relief in these situations.
Luckily, these organizations aren't usually as tied down to stringent regulations - they can make their own rules and are a little more relaxed. An increasing amount of these companies turn to the Payment Reporting Builds Credit scoring model, which allows them to eschew traditional credit scores and take other financial information into account, like whether or not the person has a history of paying off utilities bills on time. For older Brits who have held accounts for years, this might be a perfect opportunity for a little financial help.