Over the past decade, the over 50’s mortgage market has transformed beyond recognition. Lifetime Mortgages once sat on the fringes of the industry with a poor reputation, but they are now moving sharply into the mainstream.

More homeowners are heading into later life with complex financial situations, non-traditional income structures and a desire to use their housing wealth to their advantage in retirement.

Believe it or not, with this evolution has come a surge in purchase activity for older borrowers. People are no longer waiting until their late 70’s to consider these products, many are looking to move home in their early to mid-retirement years, sometimes to downsize, sometimes to upsize and often to relocate closer to family or amenities.

However, while customer motivations have modernised, some product frameworks have not moved with the times. Increasingly, advisers are encountering scenarios where lifetime mortgages in the purchase market don’t quite work the way clients expect.

A recurring theme in recent cases is the mismatch between consumer expectations and lender porting policies. Traditional mortgages have conditioned borrowers to assume that porting is straightforward, a matter of transferring a product and adjusting the loan size to suit the new property. Unfortunately, with lifetime mortgages it can be a very different story.

Some lenders still design their porting criteria around the assumption that if a customer is moving, they must be downsizing. That might have been true 15 years ago, but it certainly isn’t now and the consequence is a growing number of perfectly reasonable transactions becoming unnecessarily complex.

In fairness, when it comes to downsizing, the rules, at first glance, seem fair enough. Lenders always work the maximum LTV based on a combination of age/equity, so for porting, as long as the customer retains the same LTV on the new (lower value) property as on their current (more valuable) home, with the appropriate capital reduction coming from the equity released in the sale, then a port can take place and no ERCs are charged.

If a customer wanted to retain more equity from the sale, effectively increasing the comparative LTV, the lenders’ view is that this wouldn’t be keeping within the original Ts and Cs and so wouldn’t be eligible for a port. The issue is that, if the customer does indeed want to hold back some equity, but the new LTV is still within their maximum allowed based on the age/equity calculation, there is no way of retaining the current product as a port and the additional borrowing on a new rate.

This issue is further highlighted if the new purchase is not a downsize. One of our clients sold their home for £240,000 and planned to purchase at £285,000. Their existing lifetime mortgage balance was only £25,000 and they wanted to port the loan and borrow a modest top-up to complete the purchase. This would be a perfectly normal request in the mainstream market but in this world it’s an obstacle course.

Their existing lender presented only two options:

Borrow more before the sale completed: Clearly this isn’t a particularly viable option for a number of reasons: They’d need to raise the money (and thus incur interest on it) before the purchase completes and the LTV would therefore be based on the lower value property, meaning higher rates of interest than would be applicable if borrowing the same amount against the new, higher value property

Sell, move, then apply for a further advance: This emphasises just how much lifetime lenders are stuck in a remortgage mindset. This suggestion completely ignores the fact that the sale would have to go through first to provide the equity needed for the purchase, and there would not be enough to complete without the additional borrowing

The only workable route left involved repaying the mortgage entirely, paying an early repayment charge and starting again with a new lender. Now to its credit, the lender agreed to a review after we escalated the issue, but the very fact that escalation was required shows how out of sync some product structures are with new consumer behaviour.

Porting is not the only weak point in lifetime mortgage purchases. Offer validity remains a major headache. Some lenders still work on three-month offer periods or, in some cases, even shorter. This would be optimistic in the best of markets, but in the current environment where chains wobble and legal timelines stretch, it’s simply unrealistic.

Add in the fact that customers in their 60s and 70s often involve family members in decision-making (which is the right thing to do but can add time) and the risk of expiry becomes even more significant.

An expired offer followed by a reissue at a new rate can substantially change the borrowing position. Lenders always stress that “it’s OK we’ll use the original valuation,” without seemingly understanding the fact that any change in rate, seems to fly in the face of Consumer Duty and especially avoiding foreseeable harm.

It puts advisers in the position of recommending a product on a purchase they know is likely not complete before the offer expires, but with no idea what the follow-on rate might be. That’s a troubling outcome for clients making long-term decisions, particularly in a highly regulated environment where predictability and clarity are non-negotiable.

For advisers, the current landscape puts even greater pressure on communication. Clients often arrive assuming that a lifetime mortgage behaves like a residential one and it falls to us to highlight the nuances of different porting rules, different timelines and different constraints.

But relying on advisers alone is not enough. Lenders must ensure that key limitations are clearly laid out pre-sale, not buried in lengthy terms and conditions and certainly not discovered weeks into a property transaction. KFIs/offers are long winded, repetitive, but often unclear in certain aspects like porting. They need to be simplified/clarified and made fit for purpose particularly when it comes to purchases.

The goal isn’t to reduce borrowing or restrict options. It’s to give customers certainty, remove avoidable stress and ensure decisions are made with a full understanding of the mechanics.

If lifetime mortgages are going to fully support a modern age 50+ buyer, the next wave of development needs to include:

• Porting policies that recognise upsizing as a possibility. Customers are moving for all sorts of reasons; to gain accessibility; to live nearer relatives; new relationships, or simply to buy in a more expensive area. Policies must reflect that.
• Clear, prominent guidance about porting limitations. No one should reach the conveyancing stage before learning that their plan doesn’t work.
• Longer or protected offer validity terms. Six months should be a minimum. Guaranteed like-for-like re-offers would go even further.
• Products designed for simultaneous sale and purchase. Not every borrower can bridge the gap between transactions. Products need to support that reality.

The over 50’s mortgage market is no longer peripheral. It is central to the future of UK housing and lending. Older borrowers are active, engaged, financially diverse and increasingly mobile. Lifetime mortgages have enormous potential to serve them well, to unlock equity, support later-life choices and provide stability.

But that potential is only realised when the product design reflects how people live today, not how they lived a generation ago.

A lifetime mortgage can be a powerful tool. It can also cause unnecessary friction when tied to outdated assumptions. It’s time for the next evolution, one where flexibility, clarity, and real-world scenarios shape the rules, not legacy thinking.

Malcolm Davidson is managing director of UK Moneyman