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Mortgage help when over 55

Hi

I’m looking for some advice on how to secure a mortgage at 56.

I have bought a right to buy home in cash from some inheritance. I have 4 years before I can sell the home I own and use the equity to move elsewhere.

I would like to move and I was thinking of getting an interest only mortgage a new home whilst my son rents my first property from me for the remaining 4 years. (This will be my first mortgage) Once the 4 years was up I will sell the RTB home and use the equity to pay the interest only mortgage off. 

Is this a good idea? Does anyone have any advice or alternative ideas?
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Comments

  • Probably best posting this on the mortgage forum where the advisors check on a regular basis
    2006 LBM £28,000+ in debt.
    2021 mortgage and debt free, working part time and living the dream
  • silvercar
    silvercar Posts: 49,934 Ambassador
    Part of the Furniture 10,000 Posts Academoney Grad Name Dropper
    First question is whether you are allowed to rent out a home you bought under right to buy? I haven’t got a clue, but I would have thought the RTB scheme was for people to live in the home they have bought not rent it out.

    if you pass that first hurdle, the next will be getting an interest only mortgage. Given the planned pay off would be the sale of another property, it would need a broker to tell you which lenders would look favourably on this plan. 
    I'm a Forum Ambassador on the housing, mortgages & student money saving boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Forum Ambassadors are not moderators and don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com (it's not part of my role to deal with this). Any views are mine and not the official line of MoneySavingExpert.com.
  • Edi81
    Edi81 Posts: 1,506 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Combo Breaker
    The other issue is renting to a family member. This is treated very differently by lenders - if your son doesn’t pay are you willing to evict? 
    Definitley one to speak to a good broker about. 
  • kingstreet
    kingstreet Posts: 39,335 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    Edi81 said:
    The other issue is renting to a family member. This is treated very differently by lenders - if your son doesn’t pay are you willing to evict? 
    Definitley one to speak to a good broker about. 
    No mortgage on property to be let.
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
  • kingstreet
    kingstreet Posts: 39,335 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    Hi

    I’m looking for some advice on how to secure a mortgage at 56.

    I have bought a right to buy home in cash from some inheritance. I have 4 years before I can sell the home I own and use the equity to move elsewhere.

    I would like to move and I was thinking of getting an interest only mortgage a new home whilst my son rents my first property from me for the remaining 4 years. (This will be my first mortgage) Once the 4 years was up I will sell the RTB home and use the equity to pay the interest only mortgage off. 

    Is this a good idea? Does anyone have any advice or alternative ideas?
    From what you've said here it's impossible to say if you will satisfy any lender's interest-only criteria. Typically, you'll need to put down 50% deposit and have £150k plus in equity over and above the mortgage amount.
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
  • sheramber
    sheramber Posts: 23,154 Forumite
    Part of the Furniture 10,000 Posts I've been Money Tipped! Name Dropper
    Are you not allowed to sell or do you have to offer it to the council/housing association first?

    if the latter, they may not want o buy it back.
  • MEM62
    MEM62 Posts: 5,372 Forumite
    Part of the Furniture 1,000 Posts Photogenic Name Dropper
    A few potential issues here.  Firstly, does the OP have the right to rent?  If they do, then they will need a BTL mortgage. (And interest only mortgages are not as freely available as they once were)  Then there will be the issue of additional stamp duty on a second home.  I doubt that the OP will have taken that into consideration.       
  • GDB2222
    GDB2222 Posts: 26,494 Forumite
    Part of the Furniture 10,000 Posts Photogenic Name Dropper
    Unless I'm going mad, the OP is looking to let a mortgage-free property and to buy a new property to reside in. Why is a BTL mortgage being mentioned? Are we assuming the current property is to be remortgaged?
    He should look at all possibilities?
    No reliance should be placed on the above! Absolutely none, do you hear?
  • Alderbank
    Alderbank Posts: 4,103 Forumite
    Ninth Anniversary 1,000 Posts Name Dropper
    There's a lot we don't know about this case.
    Taken in conjunction with the OP's other thread, they have inherited a substantial amount in their grandmother's will. They are keen to move abroad as soon as possible (the other thread is to do with completing the sale of grandmother's home when they are overseas). 
    They plan to buy their council house for cash using RTB and I presume the overseas property they actually wish to live in will be in the Caribbean or wherever. I also assume that their son currently lives with them in the council house and will continue to live there after purchase until they can sell it without paying anything back to the council, which will be in about 5 years.

    Some people might say that the ethical thing to do would be to just move away and allow the council to let the house to another needy family. However I can't see anything illegal about what they plan to do.
    To my mind it would be simplest to allow the son to just stay in the house as the occupant for a few years. If they go down the route of a formal tenancy they will have to comply with all the onerous duties of being a landlord such as gas and electric safety checks etc. and all the rent will be subject to UK tax, plus they will have to pay capital gains tax on the considerable profit they will make when they finally sell with vacant possession. The only benefit I can see for a formal tenancy for their son would be if he is on benefits and will be claiming UC for the rent, as the OP would need to show that it was not a contrived tenancy.
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