Is a £50k mortgage over 12 - 15 years a possibility at pension age.

Mabel2012

I'm age 68, retired and have a reasonable pension and could afford to pay £400 a month in mortgage payments. I want to move closer to my son and will be selling my flat. The proceeds of the sale plus my savings will amount to around £500,000 after selling and buying expenses. The prices where I hope to move to are around £550,000 for the type of property I'm hoping to buy. The shortfall will be around £50,000. Will any mortgage company be willing to lend me the £50k.

MalMonroe

Hi, I'm a bit older than you (72) but over the next twelve months will be looking for a mortgage to buy somewhere of my own as I'm renting right now. I'll have a decent deposit but will need a mortgage too. 

From looking around on this forum, I have gleaned that it's sensible to consult a mortgage broker in the first instance and that it is possible for elder people like us to obtain mortgages. It's just a question of trying to get the best one for our circumstances.

So that would be my advice - consult a broker - if possible one who has experience in obtaining mortgages for retirees. Even if their services aren't free, it seems that their help is well worth the cost.

Mabel2012

MalMonroe said:

So that would be my advice - consult a broker - if possible one who has experience in obtaining mortgages for retirees. Even if their services aren't free, it seems that their help is well worth the cost.

I'm pleased I'm not alone in seeking a mortgage in retirement.

When I took out the last mortgage after looking at headline rates from many banks and building societies, I received quotes from the Nationwide and Barclays. Barclays won.

Do mortgage brokers advertise the fact that they can secure mortgagees for oldies or do you have to shop around to find a suitable broker. Is there a register of brokers or association they have to belong to.

MWT

I would suggest you talk to advisors that include Retirement Interest Only  (RIO) and also Lifetime Mortgage products in their range.

That should give you the best chance of finding a solution that fits your needs and your income.

Mabel2012 said:

I'm age 68, retired and have a reasonable pension and could afford to pay £400 a month in mortgage payments...

The decision will be less about what you feel you can afford and more about what the lender considers to be a safe level of payment based on the security and certainty of your income stream.

... but the good news is that at 68 with the LTV that you are talking about, as long as the property type and location are suitable, you will have options including Lifetime Mortgage products which mean you could be paying anything from zero upwards per month.

One free source of advice that is worth talking to would be StepChange Financial Solutions ( https://www.stepchange.org/how-we-help/mortgages.aspx ). They are associated with the StepChange debt management charity, but this side of their organisation focuses on mortgage adivice including retirement options. They make no charge for their services so even if you just have a conversation with them to explore your options, there is no risk or obligation to proceed.

Linton

You can get retirement interest only mortgages (RIOs) where the capital is repaid when the house is sold when you die or go into full time care.  Like any other mortgage you have to prove that you have sufficient guaranteed income to pay the ongoing interest.  We were able to get one that took into account our drawdown income.  The loan was sufficient for us to upsize to double the house value.

Another option is an equity release mortgage.  Modern ones are very much like RIOs except that the interest is added to the loan so income is not a factor   This seems a very useful option when the interests of your beneficiaries are not a major concern. 

Lifetime mortages can be fixed for trhe full term which with the current outlook on interest rates seem very worthwhile especially as retirees would normally have a fixed income.

Most of the lenders in the retirement market are not the usual high street companies.  For both options you will need to go through a suitably qualified advisor/broker. If you dont the lender will require you to use their own in-house advisor. 

Mabel2012

@MWT and @Linton Thanks for your detailed advice.

When I had my last mortgage I paid back as much as I could afford and it was paid off in 20 years. My friend had an interest only mortgage at the same time and had to find a sizable sum, much greater than estimated, at the end to pay off the capital. I would rather avoid leaving my son with additional payments related to my mortgage, except for paying the balance outstanding. I would rather avoid equity release. I am completely risk adverse.

As I get the state and an occupational pension there is no fluctuation in my income and I can't become unemployed. Thank you for recommending Stepchange, they sound up my street.

Linton

Mabel2012 said:

@MWT and @Linton Thanks for your detailed advice.

When I had my last mortgage I paid back as much as I could afford and it was paid off in 20 years. My friend had an interest only mortgage at the same time and had to find a sizable sum, much greater than estimated, at the end to pay off the capital. I would rather avoid leaving my son with additional payments related to my mortgage, except for paying the balance outstanding. I would rather avoid equity release. I am completely risk adverse.

As I get the state and an occupational pension there is no fluctuation in my income and I can't become unemployed. Thank you for recommending Stepchange, they sound up my street.

Your son would not be left with additional payments.  When you die or permanently go into care, with a RIO the mortgage is paid off from the sale of the house.  There will be a no negative equity guarantee so the mortgage company could not take more than the value of the house even if the house were to drop in value You should be able to get a fixed rate for the whole of your life which is lower risk than a variable normal mortgage given your fixed income.

It is worth talking to Stepchange to understand your options.

MWT

Mabel2012 said:

My friend had an interest only mortgage at the same time and had to find a sizable sum, much greater than estimated, at the end to pay off the capital. I would rather avoid leaving my son with additional payments related to my mortgage, except for paying the balance outstanding. I would rather avoid equity release. I am completely risk adverse.

As Linton has explained, the modern versions of these products carry no risk for your son beyond the value of the property they are secured against, and can often be optionally, fully repaid, over time without penalty.

StepChange will listen to your imperatives and objectives and make their recommendation accordingly, so just let them know what is important to you during the conversations.

... and of course if your income is sufficient, there may be no need for anything beyond a more 'normal' repayment mortgage anyway which they can also cover.

[Deleted User]

Nationwide offer a range of later life mortgages for 55 to 84 year olds. (94 if you already have a mortgage with them)
The products include interest only, capital and interest, and lifetime mortgages  (equity release.) Might be worth a look.

Mabel2012

I'm so pleased that I posted on here as until I received your replies I didn't know that someone my age could get a mortgage.

I started the ball rolling today and phoned my bank. They offer a repayment mortgage to end no later than age 80 so next year I would take out an 11 year mortgage. The rate today is 3.49%.  I don't know if that is about average.

I plan to speak to StepChange this week and I will also phone Nationwide. Thank you @[Deleted User] for the Nationwide tip.