Over 50's will bit hit by new mortgage regulations

grizzly1911

ukcarper wrote: »

They would have a very large deposit half the equity in family home. They could have retired early and be recieving that pension now with the prospect of being better off when they reach state pension age.

If they have alarge deposit why do they need to borrow more, possibly beyond their means.

Pension isn't likely to keep pace with real inflation and essential expenses will rapidly start to eat any surplus you can manage to prove.

Quite why anyone on modest means would want to take on that liability brings to question their sanity, but luckily I don't think that is an FSA regulatory question.

Whilst many people do live to a ripe old age without problem there are also many that do not live and that do have problems.

Banks are not pawn brokers - or rather they shouldn't be, so simply selling an asset because someone has croaked shouldn't really be a going in position.

Gracchus_Babeuf

ukcarper wrote: »

If it is possible to pay mortgage why should they go into sheltered housing you seem to be of the impression that somebody in their seventies can not live an enjoyable indepedent life.

They can if they have paid their mortgage.

ukcarper

grizzly1911 wrote: »

If they have alarge deposit why do they need to borrow more, possibly beyond their means.

Pension isn't likely to keep pace with real inflation and essential expenses will rapidly start to eat any surplus you can manage to prove.

Quite why anyone on modest means would want to take on that liability brings to question their sanity, but luckily I don't think that is an FSA regulatory question.

Whilst many people do live to a ripe old age without problem there are also many that do not live and that do have problems.

Banks are not pawn brokers - or rather they shouldn't be, so simply selling an asset because someone has croaked shouldn't really be a going in position.

Did you read thread the person got divorced had to use their part of sale to purchase cheapest property available only other choice would be to rent which would rapidly eat into the money used as equity.

No banks are not pawn brokers but a £30k mortgage on say a £150k property over 25 years to someone who is 55 is probably a better risk that a £135k mortgage to a 25 year old on same property.

ukcarper

Gracchus_Babeuf wrote: »

They can if they have paid their mortgage.

They also can if they have a small mortgage and a reasonable pension

Graham_Devon

ukcarper wrote: »

Did you read thread the person got divorced had to use their part of sale to purchase cheapest property available only other choice would be to rent which would rapidly eat into the money used as equity.

You said the deposit they had was huge.

Now you say it would be rapidly used up from renting....suggesting they don't work.

So wouldn't be able to get a mortgage anyway....as they don't work.

Or are you suggesting they do work, but don't earn enough to rent a place, therefore having to use their deposit to pay the rent.....

.....but they should be given the go ahead for a mortgage going into their twilight years?

Confizzled.

ukcarper

Graham_Devon wrote: »

You said the deposit they had was huge.

Now you say it would be rapidly used up from renting....suggesting they don't work.

So wouldn't be able to get a mortgage anyway....as they don't work.

Or are you suggesting they do work, but don't earn enough to rent a place, therefore having to use their deposit to pay the rent.....

.....but they should be given the go ahead for a mortgage going into their twilight years?

Confizzled.

Don't work have a pension

Where I am a flat would cost £750 a month so comparing that with £160 mortgage I would eat up equity at the rate of over £7k a year so by the time they were 66 they would have used £70k probably more as rents will probably increase.

CRISPIANNE3

What would happen if someone takes out a joint mortgage and one is a lot younger than the other. Not sure how that would work.

grizzly1911

ukcarper wrote: »

Did you read thread the person got divorced had to use their part of sale to purchase cheapest property available only other choice would be to rent which would rapidly eat into the money used as equity.

No banks are not pawn brokers but a £30k mortgage on say a £150k property over 25 years to someone who is 55 is probably a better risk that a £135k mortgage to a 25 year old on same property.

ukcarper wrote: »

Lets take someone in their mid 50s who gets divorced after selling family home they need a mortgage of £30k to buy a small flat. They have a final salary pension of £10k can you give me a good reason why they shouldn't be given a 25 year mortgage.

I can and do, the posts say different things.

I would say the risks are different that is all. The 25 year old has more chance of increasing income over the longer term. More time to sort things out if things go belly up.

I haven't said that banks shouldn't lend to older people or I/O I personally don't think they shoulkd be on standard mortgage products.

ukcarper

I'm not talking about I/O and I don't see the problem with lending to a 55 year old.

More chance of losing job that pension some pensions are indexed link so increase in line with CPI/RPI guaranteed, larger falls in property price can occur before no equity

What I am saying is that each application should be based on the merits of that application and a blanket band should not be applied.

MouseTrap

ukcarper wrote: »

Don't work have a pension

Where I am a flat would cost £750 a month so comparing that with £160 mortgage I would eat up equity at the rate of over £7k a year so by the time they were 66 they would have used £70k probably more as rents will probably increase.

My previous comments were a bit flippant but your example is slightly strange. For me it is common sense that a 55 year old should not take out a 25 year mortgage.

They should be able to take out a mortgage for a shorter period, so long as they can afford the repayments.

Perhaps in your example the person who retired early should consider returning to work in order to pay off a shorter mortgage? (Unless there are other factors preventing work of course). It's lovely to be able to retire at 55 but as the individual's circumstances have clearly changed, a return to work could be the most sensible option.