The later life lending market is already a massive opportunity for advisers, with UK Finance data for the third quarter of last year estimating it was worth £6.5bn.

That is clearly a major market – and it is based on just three months’ figures – but it is also only a fraction of the true potential of this sector, with estimates from Savills showing that over-50s hold net housing wealth of £4.77trn, and Key’s own data showing over-65s own net property wealth of £2.94trn.

The big figures illustrate the here-and-now opportunity for advisers. However, this is just the tip of the iceberg, and recognising the demographic and structural drivers that are set to see the later life lending market grow exponentially in the years ahead is crucial for advisers looking at where to invest and develop their own businesses.

The reframing of the home as an asset central to the financial planning process opens up opportunity for all types of advisers, whether they are later life lending specialists, mainstream mortgage brokers or intermediaries working in the pensions and wealth space.

The FCA and the Budget

The Financial Conduct Authority’s (FCA’s) recent Mortgage Market Discussion Paper (DP 25/2) has acknowledged that “mortgage products targeted at older borrowers, whether lifetime, retirement interest‑only (RIO) or other forms of mortgage, are increasingly mainstream.”

It was billed as launching “a public conversation on the future of the mortgage market” and FCA CEO Nikhil Rathi has subsequently in speeches highlighted the importance of later life lending as part of building the mortgage market of tomorrow.

He has asked whether some of the UK’s £9trn of housing wealth can be unlocked more effectively and put to more productive use for the benefit of individuals and society, particularly to sustain living standards in later life.

This discussion is perhaps made even more relevant post-November 2025’s Budget. Chancellor of the Exchequer Rachel Reeves froze income tax thresholds and inheritance tax (IHT) thresholds, while previously announced measures on including unused defined contribution pensions in estates will come into effect in April 2027.

The long drawn-out Budget process of leaks and counter leaks created unwelcome uncertainty that has slowed transactions in some sectors and caused friction in pipelines. But, taking a longer-term view, it has highlighted the value of advice and the importance of customers considering all options when funding later life or pursuing intergenerational wealth transfer strategies.

More older customers are going to be paying more income tax due to income tax thresholds being frozen and more estates will need to plan for IHT as a result. Furthermore, the mansion tax – or High Value Council Tax Surcharge – is expected to raise £400m per year from 2029/30.

Many older homeowners are asset-rich but cash-poor and will be feeling the pinch from frozen income tax thresholds and will want to find ways to pass on property wealth. Those in £2m homes may struggle to pay the mansion tax.

Lifetime mortgages can help with boosting retirement incomes and with supporting gifts to family members. Including property wealth as part of financial planning has never been more important as a result of the Budget and direction of travel being pursued by this government.

Building for later life lending success

For mainstream mortgage advisers, the key foundation for success in later life lending is expanding their field of vision and developing an improved understanding of the innovation that has already taken place in the market.

Modern lifetime mortgage products now offer a wide range of benefits, including the ability to make voluntary repayments as well as rate discounts for customers committing to serve some or all of the interest. Products allow customers the flexibility to mitigate the impact of compound interest and to manage the cost of borrowing while maintaining their standard of living as tax bills rise. Also, there are options available that offer no early repayment charges (ERCs), increasing flexibility in the event that circumstances change, perhaps on the back of an inheritance, or opening up remortgage opportunities if rates fall.

Rate differentials between specialist later life lending products and those available in the mainstream market are only part of the story. Advisers need to dig deeper into the options available and assess benefits and protections, such as fixed rates for life, certainty of tenure and no-negative-equity guarantees, alongside cost of borrowing considerations and the specific risk preferences and personal circumstances of customers.

There is plenty of support for mainstream mortgage advisers who want to learn about later life lending and all the options available. Air Academy, for instance, offers professional development, industry-leading training and adviser resources, as well as support around customer acquisition strategies.

Building a later life lending proposition, and diversifying into other areas of ‘advice-heavy’ specialism, will be important for many mainstream mortgage advisers in the years ahead as the regulatory environment appears to be opening the pathway for lenders going direct to customers when it comes to ‘vanilla’ products – so threatening existing income streams.

Advice is central to later life lending and always will be, with the result that advisers can protect volumes and margins and continue to grow their businesses in the face of growing competitive pressure in the mainstream space.

Planning for success in later life lending

Advisers need a robust business plan to succeed in the market and they need to review it regularly. Central to any plan is ensuring that enough time and resource is allocated to customer acquisition.

Our experience is that customer acquisition is the key barrier for specialist advisers in the later life lending market. The UK Finance data, for instance, showed that while later life lending in the third quarter of last year increased by 25%, total lifetime mortgage lending rose by just 4%.

This is where mainstream mortgage advisers are sitting on an incredible opportunity. The customers who need these solutions are held in the databases of mainstream mortgage advisers. However, many are not aware of the options available to them and simply need to be engaged.

Rather than acquire the next first-time buyer or focus on low-margin product transfer transactions, advisers should look at their over-55s customer bank and consider how they can better support their needs and wants.

Success is also about more than just lending solutions – advisers need to take a holistic view of what customers need, and that should include offering estate planning services such as wills and lasting powers of attorney.

Inevitably, it also means having robust compliance and oversight models in place to ensure that later life lending advice is fully compliant and producing good customer outcomes. Where necessary, firms should look to working with external experts – with Paradigm Consulting’s bespoke services in the later life lending space an excellent example of the support available.

Success will also mean embracing technology and driving efficiency in all processes. That can mean adopting artificial intelligence (AI) for automating administrative tasks such as writing suitability reports and using services from lenders such as More2life’s ProView to ensure recommendations are right first time, with product criteria made a core part of the sourcing/research process.

Later life lending solutions enable borrowers to stay in the home they love and have evolved to meet homeowners’ later life income and capital needs. They are increasingly relevant to all homeowners aged 55-plus and will continue to be so. The time is right for advisers to prepare for the take-off of the later life lending market in 2026.

Source: Mortgage Solutions