Best way to buy a house

Mozza001

55 later this year, currently employed earning 42k a year, job safe.

Have no real savings as such, have circa 500k in a few sipps, currently  got about 1100 going into workplace pension per month most of which paid by employer.

Always rented, been paying child support for a long time, just ended.

Lot of decisions to make this year, don't like work but whilst pension is being contributed to as above gritting my teeth and will carry on for as long as I can.

Dilemma is the renting, I  think I need to buy a place or I will be renting until the day I die, taking all the above into consideration what do people think my best course of action is?

Don't really want to use ALL TFLS

Property's where I am and looking at are around 170k.

Im thinking best option is to put as big a deposit as I can with TFLS and get 14 year mortgage on the rest?

Part of me just wants to withdraw enough to buy outright and take the hit on the Tax but I realise this is rash. 

Uhhhhhh.

tacpot12

It's probably a finely judged decision. If you buy, you also have to budget for maintenance, and while you might be able to do some maintenance for the next 10-15 years after that you will probably have to rely on tradespeople to do the work. 

Renting avoids the need to budget or arrange for maintenance, but you are at risk of rents rising faster than your income. Buying would seem to be the sensible choice for security.

eskbanker

There isn't enough to go on there - you'd need to model in much more detail what your annual income and expenditure would be in both scenarios.

Marcon

Mozza001 said:

55 later this year, currently employed earning 42k a year, job safe.

Have no real savings as such, have circa 500k in a few sipps, currently  got about 1100 going into workplace pension per month most of which paid by employer.

Always rented, been paying child support for a long time, just ended.

Lot of decisions to make this year, don't like work but whilst pension is being contributed to as above gritting my teeth and will carry on for as long as I can.

Dilemma is the renting, I  think I need to buy a place or I will be renting until the day I die, taking all the above into consideration what do people think my best course of action is?

'All the above' is precious little on which to make comments on such a major decision.

Have you actually taken any steps to find out what sort of mortgage you might qualify for? That surely would be a wise starting point.

Mozza001 said:

Don't really want to use ALL TFLS


Part of me just wants to withdraw enough to buy outright and take the hit on the Tax but I realise this is rash. 

These two statements seem to be contradictory in the extreme!

Also...taking any taxable cash would trigger the Money Purchase Annual Allowance, meaning you/your employer could only contribute a maximum of £10K per year (including personal contributions, tax relief on any personal contributions, and your employer's contributions).

Mozza001

Marcon said:

Mozza001 said:

55 later this year, currently employed earning 42k a year, job safe.

Have no real savings as such, have circa 500k in a few sipps, currently  got about 1100 going into workplace pension per month most of which paid by employer.

Always rented, been paying child support for a long time, just ended.

Lot of decisions to make this year, don't like work but whilst pension is being contributed to as above gritting my teeth and will carry on for as long as I can.

Dilemma is the renting, I  think I need to buy a place or I will be renting until the day I die, taking all the above into consideration what do people think my best course of action is?

'All the above' is precious little on which to make comments on such a major decision.

Have you actually taken any steps to find out what sort of mortgage you might qualify for? That surely would be a wise starting point.

Mozza001 said:

Don't really want to use ALL TFLS


Part of me just wants to withdraw enough to buy outright and take the hit on the Tax but I realise this is rash. 

These two statements seem to be contradictory in the extreme!

Also...taking any taxable cash would trigger the Money Purchase Annual Allowance, meaning you/your employer could only contribute a maximum of £10K per year (including personal contributions, tax relief on any personal contributions, and your employer's contributions).

14 year mortgage at 55, as been told they only do up to the age of 69.

Paying off in one go is a wishlist really, i know its not the route to take.

All the above is what ive got, im an electrician, i have never had ANY financial nous about me whatsoever, hence asking for not neccessarilly advice, but ideas and/options.

Thanks for the reminder on the MPAA.

Mozza001

eskbanker said:

There isn't enough to go on there - you'd need to model in much more detail what your annual income and expenditure would be in both scenarios.

There are a lot of people on this site who work in the pension/financial sector, a lot who dont but who are savvy with money,

Most of us are not, havent had the education or life experience to aquire it hence asking for advice/ideas.

You cant judge everyone with your own high standards, my expenditure will, same as most of my life be modelled to what i have coming in at the end of the month, currently 42k a year, when i finish i will look at what i have and cut my cloth accordingly.

poseidon1

Points made in other posts certainly valid  ( especially  with regard to triggering the MPAA ) and you do have a difficult conundrum.

That said, I personally would find renting in the UK in retirement ( particularly in England ) hugely unappealing.

However, given the growing size of your Sipp  and its potential to fund a mortgage beyond  age 70  (which appears to be your target end age for mortgage purposes ) why not consider a mortgage to age 80 to limit the amount of TFLS needed for the house purchase?  An extra 10 years on a repayment mortgage should give rise to usefully lower monthly payments on a larger mortgage than you would normally consider.

Finding a mortgage provider that will permit an age 80 end term may take a little time, but at age 66 I recently concluded  a  14 year  repayment mortgage with Barclays Bank (5.24٪  5 year fixed). I originally was going for age 75, but they kindly offered the extra 5 years to reduce monthly payments so the possibility does exsist with at least one mainstream lender.

Another possibility is a new entrant to long term fixed rate mortgages called Perenna. Not the cheapest around ( 90% LTV 5.76% fixed in February)  but this is available on terms up 30 years!

You have already built a commendably large Sipp, it would be a shame to massively impact its ability to provide a comfortable level of retirement income, by an excessive TFLS withdrawal at this time.

 I would be more inclined to leverage your current salary earning status to fund as high a mortgage as you can afford.

Mozza001

poseidon1 said:

Points made in other posts certainly valid  ( especially  with regard to triggering the MPAA ) and you do have a difficult conundrum.

That said, I personally would find renting in the UK in retirement ( particularly in England ) hugely unappealing.

However, given the growing size of your Sipp  and its potential to fund a mortgage beyond  age 70  (which appears to be your target end age for mortgage purposes ) why not consider a mortgage to age 80 to limit the amount of TFLS needed for the house purchase?  An extra 10 years on a repayment mortgage should give rise to usefully lower monthly payments on a larger mortgage than you would normally consider.

Finding a mortgage provider that will permit an age 80 end term may take a little time, but at age 66 I recently concluded  a  14 year  repayment mortgage with Barclays Bank (5.24٪  5 year fixed). I originally was going for age 75, but they kindly offered the extra 5 years to reduce monthly payments so the possibility does exsist with at least one mainstream lender.

Another possibility is a new entrant to long term fixed rate mortgages called Perenna. Not the cheapest around ( 90% LTV 5.76% fixed in February)  but this is available on terms up 30 years!

You have already built a commendably large Sipp, it would be a shame to massively impact its ability to provide a comfortable level of retirement income, by an excessive TFLS withdrawal at this time.

 I would be more inclined to leverage your current salary earning status to fund as high a mortgage as you can afford.

I wasnt aware you could get up to 80 years, many thanks.

eskbanker

Mozza001 said:

eskbanker said:

There isn't enough to go on there - you'd need to model in much more detail what your annual income and expenditure would be in both scenarios.

There are a lot of people on this site who work in the pension/financial sector, a lot who dont but who are savvy with money,

Most of us are not, havent had the education or life experience to aquire it hence asking for advice/ideas.

You cant judge everyone with your own high standards, my expenditure will, same as most of my life be modelled to what i have coming in at the end of the month, currently 42k a year, when i finish i will look at what i have and cut my cloth accordingly.

Not sure why you seem to be taking offence - I'm not judging anyone, just highlighting that your decision about whether to rent or buy really needs to recognise the financial impact of each option.  It's not a criticism if you haven't done that yet, but simply an observation that, without some meaningful figures, it isn't practical for anyone to offer sufficiently informed guidance, which could ultimately cost you hugely....

Mozza001

eskbanker said:

Mozza001 said:

eskbanker said:

There isn't enough to go on there - you'd need to model in much more detail what your annual income and expenditure would be in both scenarios.

There are a lot of people on this site who work in the pension/financial sector, a lot who dont but who are savvy with money,

Most of us are not, havent had the education or life experience to aquire it hence asking for advice/ideas.

You cant judge everyone with your own high standards, my expenditure will, same as most of my life be modelled to what i have coming in at the end of the month, currently 42k a year, when i finish i will look at what i have and cut my cloth accordingly.

Not sure why you seem to be taking offence - I'm not judging anyone, just highlighting that your decision about whether to rent or buy really needs to recognise the financial impact of each option.  It's not a criticism if you haven't done that yet, but simply an observation that, without some meaningful figures, it isn't practical for anyone to offer sufficiently informed guidance, which could ultimately cost you hugely....

Hi, not taking offence and thanks for the reply.

I dont know what else i can give, i guess "the financial impact of each option" is what im trying to work out.

Beddie

Mozza001 said:

poseidon1 said:

Points made in other posts certainly valid  ( especially  with regard to triggering the MPAA ) and you do have a difficult conundrum.

That said, I personally would find renting in the UK in retirement ( particularly in England ) hugely unappealing.

However, given the growing size of your Sipp  and its potential to fund a mortgage beyond  age 70  (which appears to be your target end age for mortgage purposes ) why not consider a mortgage to age 80 to limit the amount of TFLS needed for the house purchase?  An extra 10 years on a repayment mortgage should give rise to usefully lower monthly payments on a larger mortgage than you would normally consider.

Finding a mortgage provider that will permit an age 80 end term may take a little time, but at age 66 I recently concluded  a  14 year  repayment mortgage with Barclays Bank (5.24٪  5 year fixed). I originally was going for age 75, but they kindly offered the extra 5 years to reduce monthly payments so the possibility does exsist with at least one mainstream lender.

Another possibility is a new entrant to long term fixed rate mortgages called Perenna. Not the cheapest around ( 90% LTV 5.76% fixed in February)  but this is available on terms up 30 years!

You have already built a commendably large Sipp, it would be a shame to massively impact its ability to provide a comfortable level of retirement income, by an excessive TFLS withdrawal at this time.

 I would be more inclined to leverage your current salary earning status to fund as high a mortgage as you can afford.

I wasnt aware you could get up to 80 years, many thanks.

Most lenders don't, more like 70-75. No need to extend it further if you can afford the payments, which I am sure you will.
I like your idea of using the TFLS, but as Poseidon says, get a decent sized mortgage, as much as you can afford monthly, so you don't need to use all the pension money. You can always take more later if your circumstances change. Hope you find somewhere decent to live at the right price.