mortgage againt my invalid pension

bradd212

I am getting increasingly frustrated with banks refusing me a mortgage based on my income. I pay rent as a private tenant and pay £675 a month, this money comes straight from my military invaliding pension. all other bills come from my low income and tax credits etc and as a family of 5 we get by ok. what id like to do is borrow against my pension, it is paid every month and is currently £9600 per year and increases against CPI, if I saved it for 25 years that would come in at £240000. plus inflation. But putting a roof over our head stops me from saving, what I don't understand is why I cant secure a mortgage against my pension,
for example I borrow 180000 over 25 years at 2% interest and full repayment, it will cost me £228,881 and I will pay £763 per month, based on what my pension is worth in 25 years + inflation this is easily affordable, if I die life insurance will pay the mortgage, and my wife will still enjoy half my pension. its a win win situation for the banks and me and no risk at all! yet nobody will borrow this amount of money on the pension, instead I keep throwing my money away in rent

Thrugelmir

bradd212 wrote: »

for example I borrow 180000 over 25 years at 2% interest and full repayment, it will cost me £228,881 and I will pay £763 per month,

Everybody would love to pay 2% interest for the next 25 years. However it's not going to happen. As interest rates in time will return to normal. Interest rates are low currently for good reason not least the current overhang of household debt. Lenders base affordability on a 6% or 7% interest rate.

bradd212

we all like to assume that they will, but that's just used as an example, my pension would be much better in a mortgage rather than rent, for me and the bank, only one person is gaining at the moment and that's the landlord, currently without inflation my pension is worth £240000, that's a fact, rising interests rates will bring in rising inflation rates

Thrugelmir

bradd212 wrote: »

rising interests rates will bring in rising inflation rates

Interest rates are raised to control and reduce inflation. That's if we don't enter a defationary period. As Europe appears to be heading.

suziqqq

If you do manage to get a mortgage with your calculations even on 2% interest you will be paying nearly £100 a month more than your current rent and more when interest rates rise. Plus you won't have a landlord to carry out repairs etc it will be down to you.
Affordability looks like one of your stumbling blocks it doesn't matter what you pay in rent the banks don't care, they are only interested in wether you can pay them back. Do you have a deposit ?

ACG

You may be able to do a SIPP - but you would need financial advice. Im not sure if you can use this for a residential property, it may only be commercial - but it could be worth trying to investigate further.