Applying as a first time buyer at 48?

WLITC

I'm planning to apply for a mortgage next year at which point I'll be 48. I will be a first time buyer and plan to have a 10-15% deposit (depends on the house price). Am I going to run into issues with the mortgage term? The state pension age for me will be 67 but I see that Nationwide and Halifax state that the term has to end before your 75th birthday. Does that mean I could realistically have a 25 year term mortgage (which would mean it finishes when I'm 73) or do they assume you won't be working after 67 and therefore will want the term to be a lot shorter or some evidence of post retirement income? I don't have any investments but I will have a private pension, but its a non contributory one (employer pays 10% of my salary to pension).

MortgageMamma

Hello

I don't think you will have any problems, especially as you have a pension, the lender may ask to see proof but you have it so there is no problem. Also, have you thought about having a shorter term? or perhaps overpaying the mortgage every year to ensure the term gradually reduces? Have you saved your deposit whilst renting elsewhere?

kingstreet

If you attempt to go past SRA, Halifax will require detailed evidence of income in retirement.

Nationwide will go to 75 provided you have evidence of pension contributions, or preserved membership of a pension scheme.

If you want the best approach for you, establish your options with a broker who has experience of what lenders accept what.

WLITC

MortgageMamma wrote: »

Hello

Also, have you thought about having a shorter term? or perhaps overpaying the mortgage every year to ensure the term gradually reduces? Have you saved your deposit whilst renting elsewhere?

Overpaying is exactly what I intend to do but I was thinking I'd rather have the flexibility of a longer term so that I free up more of my salary for refurbishing etc in the first year. I am currently renting and saving now. Hoping to have around £27k by next autumn and to purchase something valued around £180k (but possibly up to £200k if they market has risen a lot).

kingstreet wrote: »

If you attempt to go past SRA, Halifax will require detailed evidence of income in retirement.

Nationwide will go to 75 provided you have evidence of pension contributions, or preserved membership of a pension scheme.

Would a non-contributory company pension class as pension contributions or preserved membership of a scheme?

kingstreet

Are your employer contributions visible on your payslips?

WLITC

kingstreet wrote: »

Are your employer contributions visible on your payslips?

Just fished out a payslip and it looks like it does, under the 'Employer Cont' section there are two entries, one that says 'Nat Ins Emper' and another that's 'Pens Er% Ded and the amount of that is exactly 10% of my monthly base salary so I think that's definitely it.

kingstreet

So you should be able to demonstrate your pension scheme membership.

MARTYM8`

kingstreet wrote: »

So you should be able to demonstrate your pension scheme membership.

Depends of course if its a defined benefit or - what it sounds like - a defined contribution pension.

With the former you will have a definite pension linked to your final/career average salary which rises by inflation. With defined contribution there is no certainty at all e.g. what if the stock market crashes just before you retire?

In the end its all about affordability - how much are you borrowing relative to salary, what will the outstanding mortgage be at SRA and what percentage of your expected retirement income will be taken up by the mortgage.

OP should be fine - he still has 18 years to his statutory retirement age - but as has been said its best to see a broker. Some mortgage firms will lend to 80 (e.g. National counties BS0 - and I even saw an article (admittedly buy to let) where they will lend at up to age 105.:D

http://www.thisismoney.co.uk/money/mortgageshome/article-3310288/Could-end-ageism-mortgage-lending.html

http://www.dailymail.co.uk/news/article-3026827/Pensioner-mortgages-pay-aged-105-Fears-buy-let-boom-elderly-spend-savings-houses.html

alchemist.1

Does this pension consideration and proof required also apply if you are intending to work past the Statutory Retirement Age?

kingstreet

It's required because you intend to borrow beyond state pension age. Some lenders may accept you working until 70, but typically if you want a term to age 75 it will be down to your pension scheme membership or benefits for you to get what you want.

WLITC

kingstreet wrote: »

It's required because you intend to borrow beyond state pension age. Some lenders may accept you working until 70, but typically if you want a term to age 75 it will be down to your pension scheme membership or benefits for you to get what you want.

So with the lenders who accept you as working until 70, would they want some evidence of salary for the 3 years past state pension or is this only more the case when pushing for terms that would take me to 75 years old?