Loam or Morgage?

Ham_+_Bud

Married Partnership age 65 + 70yrs. Run a small business from home, we have no morgage. The house is worth £120,000, we need an extension, we are running out of space.
We have two grown up children we would like to leave them the house. We need £25,000, Is it better to remorgage or take a loan offered to us at 5.6% apr over 10yrs. Will we get a morgage at our age?

exil

Must admit I like the idea of taking a loam - would do my garden no end of good.

The thought of having my offspring still at home when I'm in my 60s make me come out in a sweat!

Seriously - if you can't get rid of the kids*- which should be option 1 -
an extension could be financed by a mortgage IF your income (from business and pensions) is enough to cover the interest payments. Basically the mortgage is repaid
when you both pass on. Which could be an issue if you wanted to leave the house to the "youngsters" or should that be "oldsters". As always, ask an IFA, some mortgage lenders specialise in pensioner mortgages.

*I mean from the house - I'm not suggesting homicide!

jobbingmusician

Are these 'kids' living at home? If so, could you get a mortgage in their names by underwriting it? Might be easier than getting a mortgage in your names at your ages, and could maybe have IHT advantages???? (Worth getting legal advice on the latter!)

margaretclare

exil wrote:

The thought of having my offspring still at home when I'm in my 60s make me come out in a sweat!

Me too. My first husband and I relocated 250 miles to avoid this!!! We sold the Pennine cottage to them 'at a price they could afford' thereby effectively giving them £30K or so in equity (this was 16 years ago). I then took on a mortgage to enable me to buy the place I now live with my second husband.

I'm a bit intrigued by this story. How come you're running out of space? Are the 2 kids really still living at home (the risk is, as happened to my first husband and I, that one or both of them start bringing their spouses and children to live - that's when space REALLY gets tight). And you get fed up of being used as a convenient free baby-sitter...

How can you leave one house to 2 separate people????

Aunty Margaret

mountainofdebt

I read it as

The OP runs a business from home and that is now taking over the rest of the house and so they want to extend the house.

But they want to finance the extension in such a way that the house (when the time comes!) that the house is left to the children ie they don't want to consider equity release. (It's easy to leave the proceeds of the house sale to 2 people)

Personally I would have thought the thought of working when I was 70 was frightening enough, never mind thinking of financing an extention to carry on working!

If the business is growing at that rate would it not be better/more relaxing to rent somewhere small?

Ham_+_Bud

Thanks for the advise, Kids are not living at home thank goodness, sorry if you were misled. "mountainofdebt" is correct, we are out of space because we work from home. We want to carry on working from home, rented premises will cost more than the repayments on a loan. We thought of getting a small morgage, so the children can pay back what remains of the morgage when we die. Is this possible?

mountainofdebt

I'm not sure if you could get a mortgage or a loan (and I don't mean to be rude here) due your age but I guess the best people to initially ask would be your bank - you don't have to get the loan from there but at least you could ask if it was possible.

I appreciate your comments about not wanting to rent but have you thought what would happen if one of one of you were took ill or worse? Would you want - or be able to - carry on your business??

Also have you thought about what affect the type of extension may have on the potential saleability of your property? From your post, it seems that you enviseage working until you drop but what if you aren't able to?

I don't mean to sound pesimistic - honest!