Mortgages and retirement age

tyler80

I'm 31 but my partner is 37, we've seen two mortgage advisors who've both said if we want a 30 year mortgage they'd need to see proof of my partners pension. Given that the retirement age will be 67 by then isn't this a bit out of date?

kingstreet

No. Because retirement age hasn't actually changed yet and is being phased-in over a number of years, the current arrangements mean the regulator requires lenders and intermediaries to ascertain and hold evidence of affordability in retirement.

Not getting that evidence would create the perverse situation where you could make a complaint about the advice given and receive redress, despite you actually wanting the mortgage over that time.

Frankly, that simply won't be allowed to happen in the current climate.

Crashandburn

Yep. It is out of date. Lenders havent changed any rules yet re the proposed changes in the state retirement age.

However not all lenders are the same. Some go beyond 67 without any issue.

A lot of this comes down to the lender/adviser showing to the regulator that they haven't over committed someone to a mortgage payment that couldn't be met when retirement comes. Whilst you say its all affordable now, if in 10 years you want to put a claim in with these 'ambulance chasing' companies for a mis-sold mortgage, the adviser and lender can show they obtain sufficient evidence that a 30 year term could be afforded. Such is the times we live in!!

Crashandburn

Oh and read this thread and you can probably see why

https://forums.moneysavingexpert.com/discussion/3141454

tyler80

I could almost understand it if we were both the same age, but I'll still be working and I earn more.

I understand what people are saying about making sure someone can afford a mortgage after retirement but the point is that a 30 year mortgage won't take him beyond retirement.

kingstreet

Is there a massive difference in the monthly payments between 27 years and 30 years? I wouldn't have expected so...?

kingstreet

£200k @ 5% over 27 years = £1,138 pm

£200k @ 5% over 30 years = £1,084 pm

Smaller difference over smaller mortgage etc.

tyler80

It's not a massive difference but as first time buyers I'd prefer to keep my monthly payments as low as possible and overpay.

We can cope with it either way, I just think it's odd that they want proof of retirement income when the mortgage would finish before retirement.

dunstonh

I'm 31 but my partner is 37, we've seen two mortgage advisors who've both said if we want a 30 year mortgage they'd need to see proof of my partners pension. Given that the retirement age will be 67 by then isn't this a bit out of date?

Yes it is out of date. The FOS generally would reject a complaint from someone who is under state pension age unless that person can prove they could afford higher monthly mortgage costs and their pension provision was for an earlier scheme age and that they didnt rely on the state pension and the adviser had correctly added the risk warning.

As crashandburn says above, there are too many scumbags who will look for an excuse in later years to get compensation. So, advisers have to protect themselves from these types.

Personally, I don't think 67 is an issue if its your state pension age as well. However, I can understand an adviser just wanting to protect themselves just in case.

Leon_W

As an advisor I wouldn't be worried about your requirements. It's not like you want a 30 year term at 60.

I think a degree of common sense is required. Proof of pension at your age is certainly not required by lenders at your age, so as long as you are aware of the situation and the broker has given you the necessary "warning" then there shouldn't be an issue. It sounds to me that the advisers you have seen have a computer says no attitude.

tyler80

I suspect you're right with the 'computer says no' statement.

To be fair, our adviser said she didn't agree with it and had queried it some weeks ago but was told it still stood until some sort of rules were updated (don't recall which)

Pension for my partner is something we're looking into, I've been paying into a pension since I was 25, but currently he has no provision beyond a state pension.