Buying a House with Health Condition

Bex6669

Hi,

I am wanting some advice please.

Myself an my boyfriend are planning on getting on the property ladder as soon as possible. We have been trying to save money but also luckily can rely on parents for a little bit more cash for the deposit. We both have full time secure jobs but not massively high wages, I'm nearly 30 years old, he is 36.

The problem that we have is that he has a serious medical condition that is likely to stop him from being able to work at some point in the future. At the moment he is working full time and fine but there is no way to tell if and when he might have relapse and have to take time off of work - for however long. There is a very high chance that he will not be able to work to retirement age.

This makes us both extremely anxious in making such a huge financial commitment such as a mortgage. Insurance companies will not provide him with critical insurance, unless it is for an new health condition. I understand that benefits cannot go towards mortgage payments. So if the worst happened and he was unable to work and for some reason his employers stopped paying him - how could we get out of that mess??!

I have heard of the government scheme where they help to pay the interest only for a short amount of time but this doesn't fill me with hope and reassurance.

We wondered about:

- Paying a higher monthly payment whilst we are young and working full time (can we change monthly costs though??)

- Saving as we go for times in need - easier said than done

- Getting a shorter mortgage (15 years?) - leaving us with higher monthly fees though.

- Shared ownership - Benefits could go towards rent but not ideal for us if we could afford a whole house.

Any advice or dos/don'ts would be very helpful.

Thank you in advance

Becky

AnotherJoe

How about, dont take the maximum mortgage you can get, but one that's say 25% -30% above what you could get on your own, then overpay so that in say 5 years or whatever you deem is a reasonably safe timescale, you could afford it on your salary alone.

MortgageMamma

I agree with AnotherJoe.

I have a bit of insight into this - I have four health conditions that have limited my ability to work for the past 8 years, 2 have gone, 2 remain and will always remain. I am in the same situation, unable to get critical illness insurance for existing conditions and any insurance premium would be enormous for me, but I wouldn't let it put me off owning a house.

What are your current occupations?

Could you take a mortgage in your own name only?

If you took a larger mortgage how much could you overpay by? Have you considered an offset?

Do you both have personal pension plans at work? One option could be to take a repayment mortgage now but if your partner becomes to ill to work then switch to interest only and repay using your pensions?

This may not be possible in your case but when I was unable to do my actual job (mortgage adviser) I came out of work and did something from home to make extra money, buying and selling antiques and vintage items. I ended up with a reasonably successful ebay business. So it may be possible, health permitting that you partner could find another way to generate a small income in future.

tomtontom

All good advice given so far.

The SMI scheme would currently help you, but within a few years it will turn into a loan that you would need to repay upon sale or death. Also if you were still working you would not be eligible as a couple, it will be an out of work benefit. Don't ask me the reasoning behind it, they seem to have missed that those with mortgages a) fall ill and b) can be trapped in a gulf between work and benefits.

You are correct on shared ownership, you can claim assistance on the rental part of it. However keep in mind that even on a sole income you may well earn too much to get any assistance.

It's good to plan ahead, and it sounds like you need to plan according to one income.

pathtofreedom

I'm in a similar situation but it is all on me. I'm 38 and moving soon hopefully to downsize into something easier to adapt for my future needs.

I can't get income insurance either. My plan is pay as much into my pension as I can so I can plan to retire early. My new mortgage is going to be over 25 years, but it is an offset and I also plan to overpay so that I'm mortgage neutral hopefully in 10 years or less.

I could have got a mortgage for 50k more than I am getting, but have chosen an area with a slightly longer commute, and in turn lower housing costs, so that I have some hope of finishing my plan, as I'm very scared about being homeless later, with all the benefit and housing changes going on.

While I'm able I am saving / over paying as much as I can, so that I could maybe just go part time, or just do contract work 3-6 months of the year, if I can't manage full time for 10 years.

It is very scary when your having to do it on your own I have to say. So at least the fact there are two of you might help. Can you get critical illness / accident / income protection insurance, as at least hopefully one of you will be able to keep working, or have an income still. If you can afford to find a way to do it pretty much all on one income, then you could use his income just to help save / over pay it faster.

For the benefits side, this is why paying into a pension helps, not just for tax savings to have more to invest, but when they assess you they don't look at your pension pot, where they would look at isas / savings. So my plan is to get as much in as I can now, along with OP the mortgage, so if I need to I can have that income again at 55 or 57 depending what they change it to.

Depending on the actual mortgage you get, depends on how many OP you can make in a year, some is fixed at 10% some is unlimited. It is also worth looking at the interest rate, and if you're HRT payers or not, as you might earn more in some savings accounts right now than you'd be accruing in mortgage interest each day. So you can have a "virtual" offset by saving in a different account to get to the point you're mortgage neutral. If you look on the mortgage free section and read some of the diaries that will help you understand it better.

If he is likely to have mobility problems or need any adaptions, it might be worth thinking about that when choosing where you're buying as well. As even if it isn't right now, knowing you'll need to live all on one floor at some point for example, might mean bungalows, or ground floor flats are a good idea, or something with enough reception rooms that you could have one as a bedroom with a shower downstairs.

Good luck with it all though, I'm a bit jealous in a way that he's lucky enough to have you help him with this.

pathtofreedom

Oh one other thing to consider, is going for the longest fix, or the best mortgage that works for you that isn't impacted so much by rate changes drastically later. As if he can't work later, you don't want to be trapped on a high SVR and unable to remortgage due to lack of affordability. So the bigger deposit you get the more that will help with that.

Lungboy

Bex6669 wrote: »

I understand that benefits cannot go towards mortgage payments.

Is that true? Once the money is in your bank how would they know?

ScorpiondeRooftrouser

Bex6669 wrote: »

- Paying a higher monthly payment whilst we are young and working full time (can we change monthly costs though??)

- Saving as we go for times in need - easier said than done

If you can do the first you can do the second; they come to much the same thing. Just save the money you would have used to make the higher payments.

Of course some mortgage allow overpayments. Or you could get an offset, which would allow you more flexibility.

The answer that you should simply borrow at a level that you will be able to service on one salary alone is of course the sensible and safe option.

pinkteapot

If you're disciplined enough to save/overpay... Take the mortgage over the longest term you can - all the way to retirement age. This minimises the monthly repayment, which is the minimum you have to pay each month. Then, for as long as possible, overpay or save a decent sum.

We took our mortgage over 28 years (maximum - taking us to hubby's retirement age) but we're overpaying and on course to pay it off in 14 years. We think of our 'standard' monthly mortgage payment as being like the minimum amount due on a credit card bill. But if times get hard in the future, we've minimised our compulsory monthly outgoings.

We've achieved this in large part by not getting the largest mortgage we could (as others have recommended above).

Bear in mind that some mortgages (eg fixes) have limits on how much you can overpay, but you can always save the excess and pay it off as a lump sum when you remortgage.

Alternatively, if you put it into savings rather than overpay, you'd have a lump that you could 'withdraw' from each month to top up your income in the future.

Another tip - although we didn't borrow our max, we did get what to me felt like a huge mortgage which was daunting. I relaxed about it because we bought a house in a hugely popular area. Houses where we live always sell (STC) in days. I know that if something happens - eg we lose an income and our budget can't stretch - we could sell and downsize before it became a problem. Try to buy a bog standard house, in a popular area, that will sell easily. Avoid anything really unusual with a limited market, so that if the worst comes to the worst you can simply sell up and rent or buy a cheaper property.

Bex6669

Thank you all so much for your messages, it has helped me a lot.

tomtontom wrote: »

You are correct on shared ownership, you can claim assistance on the rental part of it. However keep in mind that even on a sole income you may well earn too much to get any assistance.

Good point that I hadn't thought of - thank you.

pathtofreedom wrote: »

Good luck with it all though, I'm a bit jealous in a way that he's lucky enough to have you help him with this.

Thank you, sorry to hear you are going it alone at the moment. You have a good point that we should hopefully always have my income at least.

MortgageMamma wrote: »

What are your current occupations?

Could you take a mortgage in your own name only?

If you took a larger mortgage how much could you overpay by? Have you considered an offset?

Do you both have personal pension plans at work? One option could be to take a repayment mortgage now but if your partner becomes to ill to work then switch to interest only and repay using your pensions?

This may not be possible in your case but when I was unable to do my actual job (mortgage adviser) I came out of work and did something from home to make extra money, buying and selling antiques and vintage items. I ended up with a reasonably successful ebay business. So it may be possible, health permitting that you partner could find another way to generate a small income in future.

I'm on £26k and he is on £21k, I work for a University so have a good pension scheme. He works for a small private company so it may not be as secure. So my income might be too low to get a full mortgage in just my name. Perhaps shared ownership though?

I didn't know you could switch to only paying interest if you had already signed up for repayments?

He has a home recording studio so get some occasional small income from recording bands, this could be an option for making money at home.

Becky

Bex6669

Lungboy wrote: »

Is that true? Once the money is in your bank how would they know?

Not sure how they would manage this but they must know somehow?

Citizen's Advice page on 'Help with mortgage costs if you're out of work' says:

"Housing costs payments contribute towards the cost of the interest payments on your mortgage. They may also contribute towards the interest payments on loans taken out to pay for repairs or home improvements. Housing costs payments can't be used to pay off any of the capital of your mortgage."