Mortgage past retirement

drbojangles

So I wrote last week that my mortgage application had been declined because of a balls-up over my student loan (undisclosed credit, paid off but still showing). I'm still waiting for the underwriters' decision based on the new info I gave them, but in the meantime I've had an email based on the old info to say not that I've been declined but that it's "no longer affordable" and that the shortest term I could have for the loan I want is 38 years (I applied for 30 years).

Obviously I'm still hoping to get what I originally applied for as I think the "no longer affordable" is because they think I still have credit which I don't. However, if they do stick to this 38 year term I don't know what to do. This would take me 6 years past retirement and I'd have to cancel my application and re-apply. I know they'll then want me to somehow prove I can still pay the mortgage after I've retired. Well how on earth do I do that? It's over 30 years away!! I have a pension but obviously it's not going to give me the £75,000 a year I earn now. I know perfectly well that I'm not going to still be paying off my mortgage in more than 30 years time but I have no idea how I'm supposed to prove this to them. My income is going to rise throughout my career, and the chances are there will be bits of inheritance at points as well. And in any case, I know my budget and I know I can afford what I've applied for!

All the information I can find on mortgages past retirement age is designed for people looking to get a mortgage who are already close to retirement. How, at age 33, can I be expected to prove what I can afford to pay when I'm 65? I don't HAVE to retire at 65, I just put that down as my retirement age because it's most likely.

Help!

tigsly

When we applied we were told to 'pick a retirment age'.. as there is none.. and that if we were to ask for a loan that went beyond the date - tehy would do 'affordability' on our pensions..

So you'd be better to say you plan to retire at 70 .. to get a 'long enough' time frame.. (that said why did they want to give you a 38 year loan?)

drbojangles

tigsly wrote: »

So you'd be better to say you plan to retire at 70 .. to get a 'long enough' time frame.. (that said why did they want to give you a 38 year loan?)

Because they reckon I can only afford the repayments stretched over that length of time. Because their initial assessment told them I'm going to be paying my student loan off for the rest of my life, even though I've actually finished paying it.

Brock_and_Roll

A 38-year mortgage is pure lunacy anyway and even 30 years is pushing it - a sure sign of the current state of the property/mortgage market. If your borrowed £100k on a 38-year mortgage and the rate averaged 5% over the life of the product, you would pay back £223k.

I appreciate the lure of property ownership but perhaps saving hard to increase the deposit level would not only increase the chances of acceptance and the rate paid but also prove financially more sensible in the long term given life's ups and downs.

drbojangles

Brock_and_Roll wrote: »

A 38-year mortgage is pure lunacy anyway and even 30 years is pushing it - a sure sign of the current state of the property/mortgage market. If your borrowed £100k on a 38-year mortgage and the rate averaged 5% over the life of the product, you would pay back £223k.

I appreciate the lure of property ownership but perhaps saving hard to increase the deposit level would not only increase the chances of acceptance and the rate paid but also prove financially more sensible in the long term given life's ups and downs.

Well yes, I know 38 years is lunacy, which is why I'm challenging it with the lender. I just want to know what I'll need to do if they insist. I know myself that I will easily pay off the mortgage in 30 years, most probably less.

I am selling a property to buy this one and have a deposit of around £200k so that's not really the issue.

kingstreet

Use the lender's online affordability calculator to establish what's possible with and without the credit in question.

FWIW an initial term of 38 years does not mean you have to have the mortgage for the whole term. You may reduce it later when moving.