Mortgage to retirement - from age 54 to 67

SarahB16

I am nearly 50 years old, work full time and own my own home outright (paid off the mortgage) and my house is currently worth c.£450k.  I’m not sure if this is the best forum to post on or whether the pensions or savings forum may be better but I read both so keep up to date with the opinions shared on those forums. 

I have a rather large unknown which makes my current savings strategy (i.e. pension investment via LGPS AVCs) difficult and that is because I will likely move house in approximately four years (at the age of 54) and would potentially need to take out a new mortgage (anywhere in the region of £100k to £150k).    

I am trying to make prudent assumptions (i.e. the cost of the house being higher than I realistically expect it to be) so I’m working on a house price assumption of £650k with a deposit of £500k (£450k my current home plus £50k savings) and a mortgage of £150k.  I also have c.£50k in a S&S ISA which I would keep invested in the tax free ISA wrapper but would not add to it.  I continue to make relatively small investments via LGPS AVCs but I feel like I’m trying to save and invest whilst juggling the big unknown of how much I would need to borrow via a new mortgage in c.4 years. 

Personally, I think it’s sensible for the mortgage to be relatively low at the age of 54 in case I was made redundant (I am trying to think worst case scenario with my planning and if this were to happen I would get a redundancy payment) and I would wish that it could be paid off (or a sizeable chunk of it via my S&S ISA if I needed to). 

Is it relatively easy to still get a mortgage at the age 54 and for it to last until I am 67? (to keep the repayments as low as possible)  Ideally, I would wish to overpay by 10% per year. If there was anything outstanding when I came to retire then I could use my tax free cash lump sum from my AVC pot to pay off the mortgage but I don’t know if mortgage providers take that into consideration when deciding how much they are willing to lend a person?  I presume not and instead that would only be used if I had my mortgage ending when I was 70 (i.e. after retirement).   

I am unsure how much I would be able to borrow as most mortgage calculators just seem to work on lending you approximately four times your annual salary and paying it off over 25 years.  

What I would like to know is how much would I be able to borrow at the age of say 54 with a term of 12 or 13 years?     

Thank you in advance for any replies.   

lisyloo

There are many calculators you could try to see what you can borrow.

Why would you want to keep your isa at low rates and pay a mortgage at higher rates.
is that just for an emergency fund?
anything over what you need as an emergency fund should not be kept as savings as it will cost to borrow and save at the same time.

you are more likely to get ill or even die than a younger person, so you need plans for sickness (long term), death and ideally medical.
unfortunately people not getting timely medical treatment is keeping lots of 50-64 year olds out of the workforce.
I’ve used private cover and it’s brilliant - but not cheap if your employer doesn’t have it.
ideally take an employers scheme if not I’d self insure for that.
tests are relatively cheap around £200.
often tests can allow you to jump an nhs queue as diagnosis is where the hold up tends to be.

SarahB16

lisyloo said:

There are many calculators you could try to see what you can borrow.

I've struggled to find any.  They all seem to work on the assumption the mortgage length is for 25 years which isn't relevant to me.  What I need to find is somewhere that allows me to enter my gross salary and a term of 12 years and see who will lend to me.  

lisyloo said:

Why would you want to keep your isa at low rates and pay a mortgage at higher rates.
is that just for an emergency fund?

My ISA isn't a cash ISA but a stocks and shares ISA.  I'm working on the assumption that hopefully in four years the mortgage market is back to normal again and I could get a mortgage with an interest rate of 4-5% and this is generally lower than the annual returns I would hope to get from my S&S ISA.  

That was my rationale for not using my S&S ISA and continuing to let it grow over time.  

However, I may decide to use the S&S ISA towards my deposit and take out a lower mortgage.  

lisyloo said:  

you are more likely to get ill or even die than a younger person, so you need plans for sickness (long term), death and ideally medical.

unfortunately people not getting timely medical treatment is keeping lots of 50-64 year olds out of the workforce.
I’ve used private cover and it’s brilliant - but not cheap if your employer doesn’t have it.
ideally take an employers scheme if not I’d self insure for that.
tests are relatively cheap around £200.
often tests can allow you to jump an nhs queue as diagnosis is where the hold up tends to be.

If I was so ill my employer, I believe, allows for early retirement due to ill health and this would allow me to access my work pension which would then be used to pay my mortgage. 

What are the tests that you refer to please that cost £200?  Is this to pay for a private test in order to get a diagnosis which then allows you to be seen quicker for an operation on the NHS?   

Thank you for your reply - very helpful. 

dimbo61

Well done on being Mortgage Free.
You might move ?
You might retire early ?
You might suffer ill health ?
What you can do over the next 4 years is save, save, save as you don't have a mortgage to pay every month.
Some great regular savers now available paying 5%+
Keep saving into the Pensions and AVC,s plus ISA,s 
Who knows what the rates and mortgage market will be in 4 years 

SarahB16

dimbo61 said:

Well done on being Mortgage Free.

Thank you - yes it was a great feeling when I achieved this. 

dimbo61 said:

You might move ?

Very likely that I will. 

dimbo61 said:

You might retire early ?

Yes, could be anywhere from the age of 62 but will hopefully have an LGPS AVC pot available to pay off my mortgage if I have one. 

That is my question though - does anybody please know where I can see what I could typically borrow over a 12 or 13 year term please? 


 dimbo61 said:

What you can do over the next 4 years is save, save, save as you don't have a mortgage to pay every month.
Some great regular savers now available paying 5%+
Keep saving into the Pensions and AVC,s plus ISA,s 

Anything I save into pensions and AVCs cannot be touched until I retire but still sensible to invest so I'm continuing to make regular monthly contributions.  

ISAs - too short a timescale so not investing in my S&S ISA at the moment as my timeframe for the house purchase is less than five years.  

Regular savings - yes that is exactly what I'm doing.  I'm watching my spending and it's literally save, save, save at the moment so that I may not even need to take out a mortgage but trying to look at different scenarios. 

Thank you for your reply.    

theartfullodger

I have a mortgage running to about age 80 (currently 74).  Makes sense for my circumstances, probably not for most.

In the current mess no idea if such mortgages are still available.

Good luck.

Martico

The calculator on this very site allows you to choose the term
https://www.moneysavingexpert.com/mortgages/mortgage-rate-calculator/

zagubov

Martico said:

The calculator on this very site allows you to choose the term
https://www.moneysavingexpert.com/mortgages/mortgage-rate-calculator/

In fact it's much improved on when we used the older version about 5 years ago to leave our 15-year mortgage after 7 years and get an 8-year mortgage.

These were all using a final age of 66.

Both were with FD, but other building societies/banks had deals.