over 50s mortgage to help kids

notyetretired

We would like to help out our 3 kids with lump sums at some stage, but none are near a position of being able to get on the housing market and meanwhile our savings stagnate.

Idea is to buy a 2-bed flat now, son and pal live in it and pay rent to cover mortgage, with some left over. We pay off mortgage with lump sums up to 2016 and have income from the rent until market picks up. Then sell flat (or our house and move into the flat) and divvy up the proceeds with the 3 kids.

We have £100k to put into it and would look to borrow £55-75k.

Problem is that husband retires in 2012 and he is chief earner with £40k. I am self-employed 15-25k, due to retire 2016.

We know that we can pay off the mortgage within 7 years at the most, however we would obviously prefer a 25-year mortgage. Problem is - banks aren't going to get much out of it if we can pay off quickly, but if we don't tell them that we can, will they lend to someone so near to retirement? Also is mentioning the rental income a good idea? As far as I can see a "buy-to-let" mortgage, which in effect is what it will be, is interest-only, whereas we would want a repayment with no penalty for repaying with lump sums.

Any advice very welcome for someone who has been out of the mortgage market for a long time!

Conrad

Buy to let mortgages able to take lump sum redemptions will be no problem, but of course the rate could be higher.
Age is fine for some lenders, especially for B2L. Having a family member reside will detter some lenders (less likely to demand rent from a loved one in theory).

notyetretired

Thanks Conrad, helpful indeed. Perhaps we don't need to mention son then!

When I put B2L into the mortgage comparison sites they say "nothing available", but there's nowhere in the form to put in a deposit, so it looks as though I am trying to recoup the total value of the house on a rent that is too small, so perhaps that's why.

Good to know that B2L would be possible - any idea how much higher the rates could be?

herbiesjp

WIth those kind of figures you should be fine

As Conrad rightly says - if lending to family lenders become limited, but still get very good deals

notyetretired

Thanks for your help - very speedy too, great forum.