Borrowing for house purchase

Dexter9719

Hi all, long story short (ish!)….my hubby is 60, has been excellent with money all his life…last mortgage paid off 13 years ago, minimal card use, no car loans etc….we are looking to purchase a house and are a measly 17% short of being able to cover the asking price in cash and even then this is only until we sell our current house when we would be able to clear anything we’d had to borrow…we approached a recommended FA who said despite his lifelong best efforts my hubby is now a “credit risk” due to his age and lack of recent credit history, the only option he could offer was a mortgage with £750pm repayments which we would have to be stuck with for 2 years (meaning we’d pay around £18k in unnecessary interest). It doesn’t seem right that he can be punished for being so conscientious all his life, we have most of the money and own 2 houses outright yet can’t borrow a small amount for a few months…any alternative ideas please?

spoovy

He's not being punished, its just another unpleasant reality of getting older. Are bad knees or failing eyesight a punishment?

Have you looked at bridging loans?

canaldumidi

As above, he's not being punished.

All lenders, whether for loans, mortgages, credit cards whatever, have policies to protect the money they lend. Those policies vary from lender to lender, but broadly include looking at income, credit history, age and other factors.

Mortgages certainly are available from some lenders to older borrowers (60s, 70s), but obviously on shorter loan periods (a 70 year old is less likely to live the full 25 years of a standard mortgage), and this pushes up the monthly payments as both interest and capital has to be paid off sooner.

Income is also a factor, so will depend whether he is still working, and/or has pension income now or in the future etc.

Not sure what you mean by 'stuck with for 2 years'. Was that the length of the entire mortgage? Or the length of a fixed interest rate period? If the former I can only assume that is based on his expected retirement age (and hence drop in income), though this seems unlikely. I don't believe any lender offers such a short mortgage term.

Also consider looking for a mortgage for a longer term and then paying it off early if/when you have the funds. Some mortgages have 'Early Redemption' costs for doing this,some don't, soread the small print.

But the bottom line is that if you do not have all the money needd for the property you want, then you have to borrow the balance just like anyone else, which means meeting the criteria/policies set by the lenders.

Speak to a different independant mortgage broker.

housebuyer143

Dexter9719 said:

Hi all, long story short (ish!)….my hubby is 60, has been excellent with money all his life…last mortgage paid off 13 years ago, minimal card use, no car loans etc….we are looking to purchase a house and are a measly 17% short of being able to cover the asking price in cash and even then this is only until we sell our current house when we would be able to clear anything we’d had to borrow…we approached a recommended FA who said despite his lifelong best efforts my hubby is now a “credit risk” due to his age and lack of recent credit history, the only option he could offer was a mortgage with £750pm repayments which we would have to be stuck with for 2 years (meaning we’d pay around £18k in unnecessary interest). It doesn’t seem right that he can be punished for being so conscientious all his life, we have most of the money and own 2 houses outright yet can’t borrow a small amount for a few months…any alternative ideas please?

Can I add that it wouldn't be 18k in interest wasted. This would likely be a repayment mortgage, so the majority of that money goes to pay off the balance of the loan, so less money for you to pay off at the end. 
Or you can eat the ERCs which wouldn't be a huge amount based on your borrowing and pay it off asap. 

Hardly being punished 🤷‍♀️ just the way it is when you try and borrow in older age.

Thrugelmir

Why not sell your existing property first? Problem solved.

Dexter9719

Thrugelmir said:

Why not sell your existing property first? Problem solved.

Thanks, because it can’t happen in the time scales needed to purchase a house we’ve seen…additionally not being in a chain is a more attractive proposition, obviously had we known we were going to come across this issue we would’ve sold first and had all the cash available.

vic_sf49

I had a variable rate mortgage in 2015, that had no early repayment charges. Do they still exist?

I had a guaranteed lump sum due 6 months after buying, that I was going to use to pay the mortgage off. Although your timescales are a bit more fluid, depending on how long it takes to sell your house.

kingstreet

Yesterday I submitted an application for a retired 68 year old who wanted to borrow £50k on a £600k purchase. We used a building society offering an ERC-free five year fix so when his current property sells, the mortgage can be repaid.

I find this "despite his lifelong best efforts my hubby is now a “credit risk” due to his age and lack of recent credit history" very odd/unusual. I'd expect this kind of response to someone with serious adverse credit history at such a low LTV.

How much are we talking about? Don't forget a broker gets a gross 0.4% of the loan amount from the lender and the broker may simply have wanted to avoid the business.

davemorton

can you not just remortgage one of the two properties, preferably on a mortgage that does not have ERC's?

grumiofoundation

Dexter9719 said:

Hi all, long story short (ish!)….my hubby is 60, has been excellent with money all his life…last mortgage paid off 13 years ago, minimal card use, no car loans etc….we are looking to purchase a house and are a measly 17% short of being able to cover the asking price in cash and even then this is only until we sell our current house when we would be able to clear anything we’d had to borrow…we approached a recommended FA who said despite his lifelong best efforts my hubby is now a “credit risk” due to his age and lack of recent credit history, the only option he could offer was a mortgage with £750pm repayments which we would have to be stuck with for 2 years (meaning we’d pay around £18k in unnecessary interest). It doesn’t seem right that he can be punished for being so conscientious all his life, we have most of the money and own 2 houses outright yet can’t borrow a small amount for a few months…any alternative ideas please?

As mentioned above this is not correct unless you plan you get an interest only mortgage or you mean you would be paying 750pm in interest. (which would mean a property price of well over 2M assuming interest rate of 2%).

london21

If you have family that can lend you the money.

Bridging loan another option but expensive at roughly 0.5% interest per month.

Otherwise will have to just wait to sell the property first and hope you find another property you like soon.

Been in a chain is common.