What are your home-owning/renting plans in retirement?

walletmoths

I'm sure I'm not the only one in this situation...

I'm stuck in a house on an interest-only mortgage (since hubby lost his job), and no mortgage company will allow us to move much closer to where I work and to a much smaller home. I've tried everywhere. To move smaller and within walking distance of work would mean we could EASILY afford to pay for a place properly. Madness, eh?

The trouble is, we have a bit of equity in our home, but not nearly enough to even buy the smallest of houses/flats outright. We're not entitled to a council house, so the only other option is private renting.

The trouble with rented, is that it costs WAY more than my mortgage, and we simply can't afford it. We have 2 kids of different sexes, and 3 bed rentals are extortionate! I can't even rent a place a small as the one I'm living in! How crazy is that?

Anyway... what I wanted to ask you, is - for those people out there who won't have a fully-paid-for home of their own in retirement - what are your plans? I can guess that the current generation of would-be house buyers are looking at never owning their own place too, so I began wondering... what are their plans for a home in retirement?

It's one of those worries hanging over me, and I just wondered what everybody else is thinking of doing?

Many thanks in advance for your ideas

bigfreddiel

This is an awful situation, but you can do something, it will just take patience, a bit of luck and the answer will come.

On the other hand you have two kids, who will look after you in years to come, enjoy Christmas, birthdays, memories, absolutely priceless.

Why am I saying this, well, my wife and I have everything bar children, I would give it all up right now for a family so don't dwell on the negative stuff, the good stuff will work itself out regardless, good luck , fj

walletmoths

Aw - thank you so much for your kind words. You really warmed my heart.

Rolandtheroadie

I'll be selling up and getting a council house.
Why can't you get a council house?

jamesd

walletmoths wrote: »

I'm stuck in a house on an interest-only mortgage (since hubby lost his job), and no mortgage company will allow us to move much closer to where I work and to a much smaller home.

Your existing lender is where you should be discussing this. You are apparently a "mortgage prisoner" and they are supposed to be trying to assist people in that position by treating them no worse than others.

It appears that you want a smaller and presumably cheaper place. That in turn means that they can reduce the amount of money they have lent and reduce the risk they have on their books. This should be a good deal for both of you.

The catch is getting the people who deal with mortgage prisoner situations to deal with you and point out that they can both help you get lower costs and reduce the amount of money at risk, while increasing ongoing affordability for you. This probably still won't meet existing underwriting rules but the mortgage prisoner rules do not have to meet those.

Hae a read of these:

'I was a mortgage prisoner but escaped thanks to MSE and saved £3,600'
Chancellor writes to lenders after 'mortgage prisoner' meeting with Martin Lewis – but more must be done
Regulator admits 'mortgage prisoner' problem as Martin meets George Osborne

Mojisola

walletmoths wrote: »

The trouble with rented, is that it costs WAY more than my mortgage, and we simply can't afford it.

Will you be able to claim housing benefit?

chiefie

Rolandtheroadie wrote: »

I'll be selling up and getting a council house.
Why can't you get a council house?

No chance of getting a council house if you purposely gave up your own home

jamesd

walletmoths wrote: »

Anyway... what I wanted to ask you, is - for those people out there who won't have a fully-paid-for home of their own in retirement - what are your plans?

Studies have shown that home owners tend to be better off in retirement due to lower housing costs. So first challenge is to try to own the cheapest possible place that meets needs. Not desires, needs. Of course you're not at that point so this doesn't apply to you yet.

Those who can't do that may be reliant on means tested benefits and renting with the help of housing benefit or its replacement.

Best to try to avoid getting into that situation because means tested benefits are not set anything close to luxury or ideal living levels. However, the state pension for a couple under the flat rate system just pays each individual their individual entitlements and that means potentially around £8,000 each. And at that level it's all untaxed. This is a quite decent income in much of the country so it's vital to ensure that there are enough years of paying in or getting credits to qualify.

I assume that you'll both be able to qualify but just in case, it doesn't have to be the woman who claims child benefit, it can be their spouse. If your husband happens to have worse record with worse future prospects than you it could pay to switch the CB to him. Not common, usually the woman is the one with the least good record, but worth knowing about.

Rolandtheroadie

chiefie wrote: »

No chance of getting a council house if you purposely gave up your own home

I'm aware of quite a few that have done it already in my local area.

edinburgher

We've bought a compact 3 bed house in an area that's very popular because of leading schools. It's a bit of a fixer-upper, but is on a decent sized corner plot. Despite it being the size of a shoe box, it took a 30 year mortgage to secure it at a monthly payment that we could afford in the short term.

We're already talking about moving to a 2 bed main door flat in our local area, or a compact flat somewhere at the seaside (35 years to state pension) :rotfl:

I doubt we'll own our current home by the time we retire, as salary sacrifice into pensions (avoiding tax, NI and some student loan payments) seems to be much more rewarding.

So either flog the house, or keep it on as a rental if the LTV is negligible and the area remains popular for families.

Freecall

Rolandtheroadie wrote: »

I'll be selling up and getting a council house.
Why can't you get a council house?

So how does that work?

Presumably one goes along to the local council, explains that you will shortly be selling your house and request a few viewings of houses which could become your new home.

The council then somehow explains to all of those who have been on the housing waiting list for years that your needs somehow trump theirs and they will have to wait while you choose one of the next available homes.

Have you given any though to what you would like? Perhaps a 4 bed with garden and a double garage would suit?