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£200k inheritance, property ladder or not?
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jem1276 said:RAS said:Have you been to a mortgage advisor as suggested, or just looked at the deals available on-line?
I don't know if certain lenders are more recommended for older mortgage applicants...guess that's another question for them.
Seems that the providers are quite relaxed about this as a way of reducing the initial monthly payments, as payments many years on will have been effectively reduced by inflation and probably a lot of these mortgages will get paid off before the end anyway.
I think at your age, it will be risky to overcommit, so probably better to lower your sights a bit regarding size/area.
No point having a lovely house but you are having sleepless nights.1 -
Is your rental property similar to the house you are looking at to buy? If so that’s a big difference between mortgage costs and rental cost (also considering the size of the deposit you have)
what are your priorities for a new property?
Are you happy in your rental property? If yes have you approached your landlord ? It might be worth considering.0 -
D123456789 said:Is your rental property similar to the house you are looking at to buy? If so that’s a big difference between mortgage costs and rental cost (also considering the size of the deposit you have)
what are your priorities for a new property?
Are you happy in your rental property? If yes have you approached your landlord ? It might be worth considering.
OP A mortgage into retirement will depend on expected retirement age and current pension provision.0 -
jem1276 said:Thanks everyone for your replies! The majority seem to say buy, which is what we expected. It was great to read the reasons too.We are currently paying £1400 a month to rent in Devon. We've looked at mortgage options with putting down a deposit of £150k, which leaves us with monthly mortgage repayments of between £1,800 and £2,200 a month, depending on the house price. So not cheaper than renting and quite a stretch each month, plus pressure to stay in the job that provides the salary this mortgage would be based on. If I had to take a drop in wages...scary.So I guess the options are to put in the whole £200k to bring down the mortgage repayments, or compromise on the house and go smaller/less desirable area. At 49, I doubt a mortgage lender would allow the length of the loan to increase to reduce payments that way.
A quick calculation says that you could get a 4.5% or less mortgage for 20 years and be paying around £1200 a month to get £200k.
With the money you have, that would get you a £350k house.
Are you saying you're paying £1400 a month at the moment for a £350k house?
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Thanks again for the replies. I wasn't aware of the possibility of mortgages being offered that far into retirement. The idea would be to pay off early, but we can't be certain of what lies ahead, so can't rely on that.
To clarify the house cost/size. We would be looking to move up in size, as the £1,400/month rental is getting smaller with two growing kids. We wouldn't want to stay renting here. The houses we are looking at buying are around 500k.
The same FA company is reviewing the pension too, so hopefully that can be incorporated into the discussions on Thursday and how it might affect our mortgage loan length.
Ideally we wouldn't be putting in the whole 200k for the deposit, for the reasons stated by people in this thread (savings for emergencies, house renovations, etc). But, if that reduces the monthly repayments to something less stressful than £1800-£2200 a month, then it might just be the better option.0 -
The idea would be to pay off early, but we can't be certain of what lies ahead, so can't rely on that.
No you can not rely on that, but what you can rely on to some extent, is that inflation over twenty years will erode the debt and make the payments easier.
Plus when the kids are grown up you may be able to downsize/equity release.0 -
As the quote goes " buy land, they have stopped making it"
For me the security of a home of my own was paramount, not being at the mercy of the rental market meant a lot (but I am "risk averse"Find out who you are and do that on purpose (thanks to Owain Wyn Jones quoting Dolly Parton)2 -
jem1276 said:Hi,
We are incredibly fortunate and are about to inherit £200k.
We are a married couple in our late 40's, 2 kids. No debt, but no savings either.
Currently renting, no assets.
1 side of us says use a large amount for a deposit, get a mortgage and buy a house.
Other side says stay as you are, invest it and make it make a much bigger amount for the future.
What would you do?
Thank you
If you want to move, have growing kids then an extra slug of cash opens more options. Including buying. No savings nor assets, what would happen today if you lost some or all household income? Did you want to give the kids a bump in life - university, wedding etc. Once you've put your worth into a house it is very difficult to extract a portion of it. You could borrow more of course in an emergency or for big expenses.
What would I do. Today I'd invest it. Pensions and ISAs etc. I'd not use it to pay a mortgage sub 4%.
What should you do. No idea. I don't know your circumstances, no one on here can so I think you should ponder what's best for the family. It is not a financial decision.0 -
jem1276 said:Thanks again for the replies. I wasn't aware of the possibility of mortgages being offered that far into retirement. The idea would be to pay off early, but we can't be certain of what lies ahead, so can't rely on that.
To clarify the house cost/size. We would be looking to move up in size, as the £1,400/month rental is getting smaller with two growing kids. We wouldn't want to stay renting here. The houses we are looking at buying are around 500k.
The same FA company is reviewing the pension too, so hopefully that can be incorporated into the discussions on Thursday and how it might affect our mortgage loan length.
Ideally we wouldn't be putting in the whole 200k for the deposit, for the reasons stated by people in this thread (savings for emergencies, house renovations, etc). But, if that reduces the monthly repayments to something less stressful than £1800-£2200 a month, then it might just be the better option.Worth, just for fair comparison, seeing what the rental would be on a larger place - because if you rented like-for-like with what you are considering buying you probably wouldn't find somewhere for £1400 a month.
But a banker, engaged at enormous expense,Had the whole of their cash in his care.
Lewis Carroll0
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