Buying a house at 70?

ClaireLR

Hi, I am hoping someone can possibly offer some advice.
Dad is 70 and has been offered the chance to buy his council house.
He has some savings but not enough to cover the full amount (he could cover 40% of the value comfortably). 
He doesn't claim any benefits.  He has private pensions totalling around £440 per month plus his state pension as income.  

Would there be a possibility of him getting a mortgage at his age? And is there any way of knowing how much it would cost based on him paying in around £20k?
I don't know much at all about mortgages so go easy on the terminology please!

readysteady123

It is possible to get a mortgage at age 70. Some lenders lend until age 85. 

A good mortgage broker may be able to give you options when it comes to choosing a suitable lender for your Dad's situation considering its not just age which is significant here but also that its a right to buy perhaps. I think the options are fewer in this scenario but it is still possible. That he has a good deposit in place and decent income, that's a big plus in terms of getting a mortgage.

If you go to any large bank's website or Google "mortgage cost calculator," you should be able to input the figures you've provided to find out approximate costs for the mortgage. 

elsien

You do have to ask though, why would he want to? He has a reasonable rent, a secure tenancy, and no worries about maintenance costs. That’s a lot of peace of mind he’s giving up at his stage of life. 

ClaireLR

elsien said:

You do have to ask though, why would he want to? He has a reasonable rent, a secure tenancy, and no worries about maintenance costs. That’s a lot of peace of mind he’s giving up at his stage of life. 

It's because he'd then have the option to sell and downsize later on if needed, to somewhere smaller like a bungalow perhaps.

Rich2808

I think the key question is how much would the property cost to buy - after any discount he gets.

I also assume it would be a freehold house and not a flat in a council block he is buying - the bank will be happier lending on the former.

There are also potential benefits - for now - in him having his money in his property than in cash savings if he ever needs social care at home as the house is ignored for this purpose but savings above £23,000 must be used first. How the new arrangements agree this week will work in practice are unclear. Might also affect his entitlement to benefits - as well as council tax support if his money is in his home not a bank or savings account.

So as has been said yes he could get a mortgage - but unless we know how much the property costs and what any mortgage monthly payment would be relative to his income we can't be definitive.

Have you tried using some mortgage calculators with a major bank or BS to test things out in theory?

https://www.moneysavingexpert.com/mortgages/mortgage-rate-calculator/

ClaireLR

Rich2808 said:

I think the key question is how much would the property cost to buy - after any discount he gets.

I also assume it would be a freehold house and not a flat in a council block he is buying - the bank will be happier lending on the former.

There are also potential benefits - for now - in him having his money in his property than in cash savings if he ever needs social care at home as the house is ignored for this purpose but savings above £23,000 must be used first. How the new arrangements agree this week will work in practice are unclear. Might also affect his entitlement to benefits - as well as council tax support if his money is in his home not a bank or savings account.

So as has been said yes he could get a mortgage - but unless we know how much the property costs and what any mortgage monthly payment would be relative to his income we can't be definitive.

Have you tried using some mortgage calculators with a major bank or BS to test things out in theory?

https://www.moneysavingexpert.com/mortgages/mortgage-rate-calculator/

Thanks Rich. If I'm honest I don't know how the new social care arrangements would work, I'm hoping if he does need social care that him owning his house (and being able to sell it) would give him the option of a better standard of care, even though he'd have to pay for it himself (by selling the house). 

We've just got off the phone to the bank. The house is worth £135000, Dad can purchase for £50400. Bank have suggested a deposit of around £17500, and lend around £32800, on a five year fix at £337.37 per month (rent is currently £417 per month). He has contents insurance but will also need to take out buildings insurance. 

Any thoughts on the best way to proceed would be appreciated - I dont know much about mortgages, Dad even less and I don't want him to end up making an expensive mistake.

Keep_pedalling

I would really be worried that he would be moving from a position of having a decent amount is savings to a situation where is is asset rich and cash poor. Having little or no savings where you are solely responsible for maintaining your home is hazardous. How would he cope with a major repair such as a new boiler?

scoey8

Hard to turn down with that discount to be fair. He could use the circa £100 a month he would save on rent to put in an emergency repairs fund. 

strawb_shortcake

Right to buy pre-covid was a long winded affair, so be prepared for the process to take around 12 months until completion.

london21

The LTV is very low, depending on the amount of years the mortgage will be for very likely his mortgage payment will be lower than his current rent.

bmthmark

If the mortgage was £337.37 and his private pension was £440 that would be way too tight. I know he has his state pension as well.
It does seem like an amazing price for the property but it would really leave your dad short of cash. Would he be happy knowing that a major repair like a new roof he would need to pay for? 
I'm surprised a mortgage company would give him a mortgage if he only gets £440 a month.