Getting a mortgage after FIRE

MoneyGeoff

I've hit a snag with my mortgage. 5 years ago I started a 5 year fixed rate at age 45. The plan was to switch to another 5 year fix (now, at age 50) then retire and then, when that mortgage expired, to pay off the remaining sum using a pension TFLS, since I'll be 55 by then. However things went better than expected so I FIRE'd a few years ago. I was thinking that I could simply switch online to another 5 year deal to see me through to age 55. Unfortunately my mortgage has been sold to Halifax and they won't allow an online switch. I've never applied for a mortgage through Halifax so it does make sense that they would want me to complete a full application.

I live off ISAs so I don't have an income. It looks like I'll have to pay the SVR for 5 years until I can access my pension. Does anyone one know of a way I could successfully get a mortgage? I've been googling asset based mortgages and retirement mortgages but no luck so far. Perhaps a mortgage with a co-signatory? Or perhaps buy an annuity or something that provides a guaranteed income? The house is worth £500K and my current mortgage is £200K.

K_S

@MoneyGeoff Ouch, that's bad luck.

If you do buy an annuity then that income can indeed be used for affordability.

A joint borrower sole proprietor mortgage could also be an option to use someone else's income for affordability.

MoneyGeoff

Thanks, I'll look into those.

I had a quick look at annuities but you have to be over 55 for the ones I saw.

I'm not certain what Halifax will want, I just put by account number into their online application system and it said I have to call them to switch mortgages. So it may not be a full application, perhaps a KYC? I'm reluctant to call because they are bound to ask if my circumstances have changed, at which point the cat will be out of the bag.

I have been paying myself a pension of £3K per month since I retired, which shows on my bank statement as 'pension'. So if they just want bank statements, I can show a continuous income. It's not going to stand up to any sort of questioning though.

K_S

@moneygeoff Well if Halifax allows a product-switch (which all mainstream lenders normally do for existing borrowers) for your account then that involves no credit-checks, income verification and no requirement to confirm unchanged circumstances. 

Was it a Tesco mortgage? I haven't done a PT for a Halifax mortgage transferred from Tesco so not sure what their policy is. 

Based on how you've described it, it's unlikely that your 3k monthly income from your ISA will be considered but if you have a 2-3 year track record of it and it can be evidenced through your bank and S&S ISA statements, there might be a few building societies that might consider. It would be a long shot though and subject to the S&S ISA value being sizeable.

ACG

Speak to Halifax. 
Ultimately (in the nicest possible way) they are stuck with you as a customer. Whether you are on SVR or not, they are stuck with you. On that basis, I think you may still be eligible for a product transfer. 

No harm in asking the question. 

MoneyGeoff

K_S said:

@moneygeoff Well if Halifax allows a product-switch (which all mainstream lenders normally do for existing borrowers) for your account then that involves no credit-checks, income verification and no requirement to confirm unchanged circumstances. 

Was it a Tesco mortgage? I haven't done a PT for a Halifax mortgage transferred from Tesco so not sure what their policy is. 

Based on how you've described it, it's unlikely that your 3k monthly income from your ISA will be considered but if you have a 2-3 year track record of it and it can be evidenced through your bank and S&S ISA statements, there might be a few building societies that might consider. It would be a long shot though and subject to the S&S ISA value being sizeable.

Yes it was a Tesco mortgage. Halifax do switches but only if your account is ‘in the right system’. There are other threads such as this: https://forums.moneysavingexpert.com/discussion/5202208/halifax-mortgages-a-roll-numbers-issue where existing customers have had to do full applications or hours of phone interviews.

MoneyGeoff

ACG said:

Speak to Halifax. 
Ultimately (in the nicest possible way) they are stuck with you as a customer. Whether you are on SVR or not, they are stuck with you. On that basis, I think you may still be eligible for a product transfer. 

No harm in asking the question. 

It’s true that they are stuck with me, but for them that means a customer whose never missed a payment of any kind, has a low LTV and better yet I don’t even have a job that I might get sacked from! So there’s no incentive for them to allow a switch away from the SVR since mortgage prisoner rules don’t apply.

I’ll call them as you say. For now I’ll just establish why I can’t switch online. If they won’t allow a PT then I’ll just decline to answer any questions on the basis that their rates aren’t competitive at the moment so I may as well shop around if I have to do a full application (they don’t yet know I’m probably stuck with them).

Thrugelmir

You have a legacy Tesco mortgage product. Halifax know nothing about you. To comply with their regulatory responsibilities. They will therefore perform a thorough check before switching you across to a new Halifax mortgage product. 

Can you not realise some of your investments and settle the mortgage in full. You've achieved FIRE.  Why expose yourself to a number of risks? 

MoneyGeoff

Thrugelmir said:

You have a legacy Tesco mortgage product. Halifax know nothing about you. To comply with their regulatory responsibilities. They will therefore perform a thorough check before switching you across to a new Halifax mortgage product. 

Can you not realise some of your investments and settle the mortgage in full. You've achieved FIRE.  Why expose yourself to a number of risks? 

Yes I agree that's what Halifax will want to do, they probably have a regulatory obligation to do so. I'll call them anyway to check. 

Paying off a debt at 2% from investments that earn a lot more isn't very FIRE  but I take your point that I've already FIRE'd now. The thing is, the plan to pay off the mortgage includes accessing my pension TFLS so it's a bit early to pay it off now. I'd have to liquidate almost all of my investments so it doesn't quite work. I'm very heavy on the pension side.

Eg if I have say £250K available now, then that can easily last 5 years until I'm 55 even with 0 investment returns because I only spend £30K per year including mortgage payments. If I pay off a £200K mortgage then there's not enough cash left to live on. Most of my wealth is in pensions as I didn't hear about FIRE until relatively recently.

london21

MoneyGeoff said:

Thanks, I'll look into those.

I had a quick look at annuities but you have to be over 55 for the ones I saw.

I'm not certain what Halifax will want, I just put by account number into their online application system and it said I have to call them to switch mortgages. So it may not be a full application, perhaps a KYC? I'm reluctant to call because they are bound to ask if my circumstances have changed, at which point the cat will be out of the bag.

I have been paying myself a pension of £3K per month since I retired, which shows on my bank statement as 'pension'. So if they just want bank statements, I can show a continuous income. It's not going to stand up to any sort of questioning though.

You might be overthinking it. Call them and go from there. 

MoneyGeoff

I'm a bit early. Halifax aren't sure if I can't switch online because I'm early or because the mortgage was bought from Tesco. They said to try again in a couple of weeks so I'll do that.