Mortgage @ 56 yrs, is it worth-it?

family4tunes

Hi all,

I have a female friend who is renting at the moment but would love to buy her own home if possible.

Her annual earnings is around the £38k figure and she is 56 years old. She is not looking to mortgage over £190k and has a savings of around £30k for deposit and any fees. It's hoped that she can get a mortgage for up to her 70th birthday or just over (14-16 yrs).

Questions are:
Would it be worth the effort
Would she be able to get a mortgage
Would it be affordable
Would her savings be enough
Would an interest only mortgage or split be better

At the moment she is paying £900 per month for her rented property so would it be worth her becoming a property home owner or staying as she is as a renter.

Any guidance will be very much appreciated.

RonoB

Of course it’s worth it. If she can get a mortgage and afford the repayments then why not. She can overpay if she has the funds to reduce the term and a pension may pay off her balance. Why pay £900 a month on rent when you don’t have to. Definitely go for repayment I don’t think you can get interest only mortgages anymore. Get a mortgage in principle then go for it. Don’t waste any for time though. Good luck.

pjcox2005

Just on the first point I would suggest it is worth the effort.


Simple figures of £160k mortgage over 15 years at 2.5% would require a monthly payment of £1,067. So it would be a higher cost to the current rent each month plus likely more repairs required.


However, at the end of the 15yrs, she'd own the property in full having paid £32k in interest and would have no rental payments in retirement. Interest per month is £177 so a huge different to the current rent. Effectively they're saving £723 a month which is going to savings in the form of equity in their house.

ACG

I am not sure she would be able to get a mortgage of £190k, that is over 4.5x income and only a 13/14 year term. She may be able to buy for £190k but that assumes a mortgage of around £160k.

Interest only/split is probably also going to be unlikely. But without more information it would be difficult to say.

Nick_C

I took out a 17 year mortgage at age 58 with Santander. I'm paying 2.74% interest (actually a little less as I get 1% cashback on the monthly repayments). It's definitely worth it for me.

Nationwide will now give you mortgage to age 85.

It only really works if you have a good private pension or plan to continue working beyond normal retirement age. Although I have capital and could afford to repay most of my mortgage, I can get a better return than 2.75% on savings and investments.