Is mortgage in retirement doable?

MartaUK

Hello,

I'm looking for advice regarding the funding of house move. We live in our own home (owned outright, no mortgage) which we extended and renovated. We would like to move to another place, ideally we would like a project, it might involve full rewire, plumbing etc, typical Homes under the Hammer scenario. I think this would not be doable if we just got into a typical property chain, I presume we would only get access to the new house after completion and would have to move in straight away, forcing us to live on a building site. I wonder if there is any type of mortgage or loan we could appy for, so we could stay in our current house, buy a run-down one and do it up within half a year or so, and then sell our current one and repay the loan from the proceeds? I know that buying a 'second' house would mean higher stamp duty, but as far as I know, you can reclaim this once you sell the previous house and only own one house.
My husband is retired (state and private pension) and I'm self-employed with little income, we're old so not typical new mortgage customers. Overall, we're on rather low income and the funds are tied in the house. I've heard of bridging loans (it looks like they're expensive) and, from what I read, I guess it could be possible to take out a mortgage on our current house and repay in like 1-2 years once we sell our current house? What would be the most cost-effective option? I was also thinking to sell up this one and rent somewhere while looking for the next house and renovating it, but in this case the rent and two house removals would probably rack up the expenses.
Any advice and suggestions would be very welcome.

Exodi

I believe, at least for the main lenders, you wouldn't be able to take out a 'retirement mortgage' on a property that is not your main residence. I'd probably discuss this with a mortgage broker (and fortunately MSE has a few that will know more on this matter). It may be that you need to mortgage your current house to finance the new property.

If you plan to repay quickly, you would also need a mortgage that doesn't penalise you for doing so (as many typically do).

I think this is a good situation to invite the services of a mortgage broker.

peterhjohnson

You might be able to use an "Equity Release" mortgage. 
Usually, these are used to extract money from a property that you already own but they can be used to move to a more expensive home - I did it. Here's an article about how it can work https://www.moneyrelease.co.uk/Equity-Release-To-Purchase-Property/

ER mortgages  tend to be more expensive but are at a fixed rate until you die/go into care. You can get out earlier but that is typically more expensive/difficult. They also have a "no negative equity guarantee" and you make no regular repayments. 

A minor wrinkle I encountered is that my mortgage offer was only valid for a month whereas "ordinary" mortgages are often valid for much longer. Fortunately my conveyancer noticed this and applied for an extension. (I think the reason for the one month is that in most cases, borrowers just want the cash and are not buying a property)

Thrugelmir

Probably worth considering selling your existing property and finding temporary accomodation while you do the work. Interest costs on a renovation/refurbishment loan are going to be well above normal mortgage rates. 

Tiglet2

Sell your current home and buy the renovation project.  Buy a secondhand caravan and live on-site while doing the work.  Sell it once the property is ready to move into.

theartfullodger

I took out a mortgage into late 60s when already retired.  It happens to be a Buy2Let.  Think it ends at age 83, interest only.

Basically people are prepared to lend you money if they think you're  good bet & can afford it.  When I did mine I needed income from pensions of at least £25k plus supplied info on ather assets and income. 

But in these troubled times, with Bre**it & Covid to be paid for (LARGE sums..) I'm expecting interest rates to keep climbing, so expect more caution than usual from lenders.

In Novemeber 1979 under Thatcher BoE base rate hit 17%.  I had a (for then..) large mortgage, it was painful: Lender was kind, only bumped their rates up to 15%....

caprikid1

"Sell your current home and buy the renovation project.  Buy a secondhand caravan and live on-site while doing the work.  Sell it once the property is ready to move into."

This 

babyblade41

It is what we are doing although not to renovate but to build . It's will be much easier that way 

Indigo_and_Violet

My parents were in their mid-60s, Dad retired on reasonable pension, Mum working part-time in the NHS. They wanted to do a similar thing (stay in existing house while they built a new one) but were deemed too old for a self-build mortgage. In the end they managed to buy the plot with savings and then had to wait for the house to sell to fund the build. They went into rental for 6 months. It added to the cost, although Mum now says the experience of going from a four-bed house to a one-bed flat was very useful in terms of having to get her (old) house in order before moving into the new one. They looked at the caravan option but decided it wasn't a good idea for a Scottish winter. It's more manageable if you have friends/family nearby who can help out with showers/let you spend evenings with them. 

As others have said, a broker will be able to give more specific advice but you might be out of luck on this one.  

[Deleted User]

theartfullodger said:

I took out a mortgage into late 60s when already retired.  It happens to be a Buy2Let.  Think it ends at age 83, interest only.

Basically people are prepared to lend you money if they think you're  good bet & can afford it.  When I did mine I needed income from pensions of at least £25k plus supplied info on ather assets and income. 

But in these troubled times, with Bre**it & Covid to be paid for (LARGE sums..) I'm expecting interest rates to keep climbing, so expect more caution than usual from lenders.

In Novemeber 1979 under Thatcher BoE base rate hit 17%.  I had a (for then..) large mortgage, it was painful: Lender was kind, only bumped their rates up to 15%....

Yes, certain mortgages are possible but im thinking OPs low income might be the barrier to this idea coming to pass.