HSBC want proof I'll be employed in 25 years time!

Geeezeee

Have just applied for a mortgage with HSBC. I am 41 year old first-time buyer with a 30% deposit and the mortgage term is 25 years. As part of the application process I was asked at what age I expected to retire and I said 67, which is true.

HSBC want my current employer to produce a note on letterhead stating that I could be working for them at this age ie. still be at the company in the year 2036!!

Now, much as I enjoy where I work, I doubt I'll be there in 26 years time, but more to the point the standard retirement age there is presently 65. While they acknowledge that this will very probably get higher (certainly by 2036) they can't confirm this in writing at present. I'm worried my mortgage offer could be rejected because of this.

Does anybody know if this is a fundamental part of the approval process, and/or whether there is another way to allay the bank's fear that I'll be retired before the mortgage term is over?

beecher2

Have a look at what your payments would be if ther term was 23 years - wouldn't have thought it would make that big a difference.

getmore4less

Why not reduce the term to 24(3)years so you are inside the 65 current normal retirement age?

Senior_Paper_Monitor

The majority of mortage companies seem blissfully unaware that retirement ages are to change ....

The following is a simplifed definition of the announced chages to date:

Retirement Age for Women

The current UK retirement age for women is 60
* From 2010 the retirement age for women will increase so that by 2020 it will also be age 65. This will not affect women born before 1950
* Women born after 6th April 1950 and 5th April 1955 will have a retirement age between aged 60 and 65
* Women born from 6th April 1955 will have a retirement age of 65

And it doesn't stop there between 2024 and 2046 the retirement age for Women is set to increase again to age 68. This will be a gradual increase so keep this in mind when arranging your pensions.
Retirement Age for Men

The current UK retirement age for men is 65

Between 2024 and 2046 the retirement age for men is set to increase again to age 68. This will be a gradual increase so keep this in mind when arranging your pension.



It is totally reasonable (and certainly as resonable that your same company will continue to employ you for the next 10 or 20 years) to assume that at your age you will be working until 67.

I have actually argued this recently with a couple of cases successfully (not HSBC of course - direct only).

A possible fall back position - take (a small) part of the of loan to interest only in order to reduce the term within the same monthly budget and use a saving programme or pension (if you have one) to 'pay off' the interest only balance at that time.

dunstonh

Your state pension age is 67. So showing 67 as your retirement age is entirely reasonable. Its possible that the person at Halifax hasnt realised that state pension ages are going up and has a tick box on their form regarding mortgages going past retirement and are still using 65 as the benchmark.

HSBC want my current employer to produce a note on letterhead stating that I could be working for them at this age ie. still be at the company in the year 2036!!

There is some logic to this question. Many employers force employees to retire at 65. They are checking to see if that is the case with you or not. Not whether you will be with that employer as that is an unknown. Just if the employer forces retirement at 65 or not.

Many companies have not yet adapted to the revised state pension ages yet.

Saadat

Hi Gezee,

Previously i worked in the secured loans market, this was very common practice, the way the lenders we appeased was one of three ways;
1. you reduced the term of the mortgage
2. you showed proof of income for the ages that they feel you would not be working(above retirement)
3. Some lenders even accepted letters from clients stating that they would not retire at retirement age, and that they would carry on working until 70(or whatever the aged needed to complete the loan)

this would then put the onus on the customer to make sure that they would uphold payments-sounds daft i know but it covered them in their audit trails if later they were asked why they lent to someone who would potentially be over the age

hope this helps

Geeezeee

Many thanks for all your insightful responses. Much appreciated.

tyllwyd

Looking here http://www.direct.gov.uk/en/employment/resolvingworkplacedisputes/discriminationatwork/dg_10026429

it would be age discrimination to force you to retire before the national default retirement age unless there is good reason. If your employer currently enforces the national retirement age, it would be reasonable to assume that they will continue to do so as the retirement age increases. Could you get a letter from them along those lines?

Hopejack

Had a similar thing with HSBC but because my DH retires at 55 and our mortgage will still have 6 years to run. He does get a good pension though so with a pension projection we were able to show that we could pay the balance of the mortgage off when he is 55 if we wish to do that.

If you were to go at 65 would you have an employee's pension? What payments would you receive - your work can do a projected income/pension statement for you. If it's enough to meet the mortgage payments or pay off the balance remaining (which I'm sure it would be as you'd only have 2 years left to pay!) then that should be sufficient.

I have to say though our ltv ratio was a lot less than yours and we weren't borrowing a high salary multiple so perhaps that's why they weren't too bothered. Our application was approved in branch, didn't go to underwriters or anything.

Also, are you applying in branch via a mortgage manager or over the telephone. We started our application over the phone but were advised to try and see an in branch mortgage manager for the reasons/situation above. I found her great and I think had we completed it all over the phone, we would have hit issues. I felt she added a dose of commonsense to the application which someone on the phone using a 'call log sheet' for their qus probably wouldn't!

unhappy_shopper

Geeezeee wrote: »

HSBC want my current employer to produce a note on letterhead stating that I could be working for them at this age ie. still be at the company in the year 2036!!

Had a similar situation with HSBC when we applied for a mortgage in 2007. I was on fixed-term employment contract (18 months at that time) and HSBC wanted a letter from my employer stating that I will be employed for the entire duration of the mortgage (15 years). So, we went and spoke to the mortgage advisor and showed her my employment history, wherein there was no break of more than 2 months since I started working. She was happy with that. HTH.