A bit of mortgage advice needed..

Dunree

Hi Guys,

A bit of background info first.

My partner inherited her fathers house in London, after he passed away.

We are in the process of renovating it with a view to selling and moving back to the country, in fact, the builder starts on Monday coming.

There is no mortgage on the property, and will very easily sell for at least £270K.

She wants to give her sister at least £50K from the sale, and the rest will be used to buy a place for us out in the sticks, and also for a few quid for my partner to bank.

And here is where the advice is needed.

I'd like to contribute in some way towards the purchase of our new place. This would also give me a bit of security, as I lost everything after a very acrimonious marital split.

The bulk of the purchase would come from the sale after the renovations are completed. (We are going 50/50 on the works).

What would my options be for a possible mortgage for the new place?

I earn around £53k p/a, I'm 50 years old, the only debt left is the building works, which will be cleared from the sale money.

I could probably manage a deposit of around £5k from my savings.

The prices we are looking at range between £200-250K.

Any advice would be very gratefully received

I think I've covered most of the info, but if I'm missing anything, please ask, I'll give as much as I can.

Dunree

kingstreet

Presumably your partner would contribute the deposit but you'd need a joint mortgage as you'll be joint owners.

You will need to be careful with the mortgage term, as it will normally need to end on or before retirement.

Do you have any specific issues you'd like to ask about?

ACG

A mortgage would need to be in joint names. So effectively your partners money being put down would count as the deposit.

eg: £100k purchase price, partner pays in £50k you then need a mortgage for £50k so you could look at 50% LTV products. As for who makes the payments, you can make the full payments each month.

You could also set up a legal document that states something like if you split up on the sale of the property your partner gets their share back.

Dunree

kingstreet wrote: »

Presumably your partner would contribute the deposit but you'd need a joint mortgage as you'll be joint owners.

You will need to be careful with the mortgage term, as it will normally need to end on or before retirement.

Do you have any specific issues you'd like to ask about?

ACG wrote: »

A mortgage would need to be in joint names. So effectively your partners money being put down would count as the deposit.

eg: £100k purchase price, partner pays in £50k you then need a mortgage for £50k so you could look at 50% LTV products. As for who makes the payments, you can make the full payments each month.

You could also set up a legal document that states something like if you split up on the sale of the property your partner gets their share back.

Thanks very much for the quick responses guys, very much appreciated

Say, for example, if we were to go for a place valued at £250k. Judging by what you are saying, if she was to put down a deposit of £200k, then the mortgage would be joint for £50, and I could pay it myself?

With regards to retirement age, I'm hoping to call it a day between 8-10 years. I don't want to be working any longer than that, so the mortgage would need to be paid off completely by then. I will have a half decent pension, but I want to enjoy it

Does that make sort of sense, or is more info required?

Sorry for sounding a bit thick on this, but it has been a while since I had a mortgage

Dunree

''You could also set up a legal document that states something like if you split up on the sale of the property your partner gets their share back''

This was the mistake I made with ex. I put the deposit down from the sale of my flat, and ended up paying the mortgage myself.

When we split up, she got a far bigger slice than she put in.

kingstreet

Sounds fine. Just remember a short term will mean higher contractual monthly payments. It may be smarter to take a longer term, but voluntarily overpay each month, using a penalty-free, tracker-type product.

It depends on how disciplined you are and what would happen if you were unable to work, pay the mortgage etc. Those lower possible payments may then be a boon.

ACG

As above, but also another option would be to take it over a longer period but then perhapse use some of your pension lump sum to clear the remainder. It all depends on affordability and what you want but you certainly have a few options available to you.

Dunree

kingstreet wrote: »

Sounds fine. Just remember a short term will mean higher contractual monthly payments. It may be smarter to take a longer term, but voluntarily overpay each month, using a penalty-free, tracker-type product.

It depends on how disciplined you are and what would happen if you were unable to work, pay the mortgage etc. Those lower possible payments may then be a boon.

When it comes to money, I'm very disciplined now. I had to take care of the finances when I was with the ex, as she was bloody hopeless.

I could probably afford around 900 pcm fairly comfortably. That wouldn't cause any hardship Kingstreet.

We're looking to be in the new place (wherever it is) by Christmas, and we are lucky that where we are in London, this place will sell, and sell quickly.

Dunree

ACG wrote: »

As above, but also another option would be to take it over a longer period but then perhapse use some of your pension lump sum to clear the remainder. It all depends on affordability and what you want but you certainly have a few options available to you.

All going well, and if the government doesn't change things, I'm in for a low six figure lump sum, but I think I'd rather have everything done and dusted by the time I retire.

I'd prefer not to carry over any debt into retirement if possible.

kingstreet

£50k x 3% over 8 years = £586.48 per month.

You might be able to overpay that and get rid even sooner!

Pay £900 per month and you'll pay it off inside 5 years.

Dunree

Sounds good

Probably a daft question, but is it possible to do something like this, but keep Mrs D's name off the mortgage?

Or does it have to be a mortgage??

kingstreet

No. If it's secured on the property she is joint owner of, you can't take a mortgage without her.

A £50k unsecured loan? I doubt it.