An unusual situation...

djbreeze

Hi everyone,

I'm in an unusual situation where I want to buy a property (solely for me to live in) for £60k. I have £20k deposit and a decision in principle (from Nationwide) for a 4 year mortgage on the £40k (I'm 59 now). Assuming I'm able to get one of the mortgage products that allows unlimited overpayment and is not liable to ERCs (i.e. a SMR/BMR product) are there any pitfalls I need to be aware of if I simply pay the whole lot off after, say 10 months or so (when I have a bond that is maturing) and be done & dusted with it? My thoughts are that I may be able to secure this property without losing a shed load of cash by doing it this way or am I missing a trick and it would cost me thousands more? Assume that I can't close the bond early & have no other recourse to funds...

Thanks in advance for any thoughts/advice & happy new year to all,

David

gwynlas

What type of property are you looking to buy for £60K?

I would be wary of buying anything that was not readily sellable in the future

Repaying £40k over the period before you reach retirement age should be might doable as we all have accommodation costs. 

i would not seek to pay it off early leaving self asset rich but cash poor

djbreeze

gwynlas said:

What type of property are you looking to buy for £60K?

I would be wary of buying anything that was not readily sellable in the future

Repaying £40k over the period before you reach retirement age should be might doable as we all have accommodation costs. 

i would not seek to pay it off early leaving self asset rich but cash poor

Thanks, it's a flat in Scotland (where happily they don't have leasehold any more). My Mum's up there in a nursing home, I can stop work in a couple of years so aiming to be closer than I am now which is >400 miles away. I'm not overly concerned about resale, might lose or gain a bit doesn't really matter, neither am I overly concerned about being cash poor, my first pension kicks in at 60, etc., etc.

What I'd like to know is am I missing anything in terms of what costs I'll be liable for, if any, on top of the £40k plus interest up to the point of paying off in full...

MWT

djbreeze said:

What I'd like to know is am I missing anything in terms of what costs I'll be liable for, if any, on top of the £40k plus interest up to the point of paying off in full...

Do you already own property elsewhere?

...if so then there will be an 'additional dwelling' charge to pay, £4,800 I think?

djbreeze

MWT said:

djbreeze said:

What I'd like to know is am I missing anything in terms of what costs I'll be liable for, if any, on top of the £40k plus interest up to the point of paying off in full...

Do you already own property elsewhere?

...if so then there will be an 'additional dwelling' charge to pay, £4,800 I think?

Thanks, no I don't...

Brie

So will you be moving there now or waiting until you retire?  In which case are you thinking of renting as that changes the type of mortgage you need to get.   How easy will it be to get rid of tenants when you do want to move there?

Or leaving it empty in which case there may be problems insuring.  

djbreeze

Brie said:

So will you be moving there now or waiting until you retire?  In which case are you thinking of renting as that changes the type of mortgage you need to get.   How easy will it be to get rid of tenants when you do want to move there?

Or leaving it empty in which case there may be problems insuring.  

Thanks, I am not thinking of renting (see OP) & will move there as soon as I'm able to.

What I'm really after an answer to is whether or not the mortgage lender will charge/attempt to charge me anything more than the mortgage amount, in this case £40k, plus the interest accrued up until the point that I pay the whole lot off. If anybody knows the answer to that it would be great. If it weren't for the fact that I have money in a bond until Oct '25 I'd be a cash buyer...

MWT

The mortgage documents will lay out any charges for redemption, which can include the costs of removing their charge from your title on the register. ... in general though you are talking about relatively low charges in the order of a few hundred at most, but this will be disclosed up front, so no surprises.

It really is mainly the ERC to look out for, and if your product does not have that then you are save.

You'll probably be paying a higher interest rate but your aim is not to be paying it for very long, so that does not matter as much.

Hoenir

djbreeze said:

a decision in principle (from Nationwide) for a 4 year mortgage on the £40k 

DIP is one thing. Whether the Nationwide will consider it worthwhile to make you an offer is another. 

djbreeze

MWT said:

The mortgage documents will lay out any charges for redemption, which can include the costs of removing their charge from your title on the register. ... in general though you are talking about relatively low charges in the order of a few hundred at most, but this will be disclosed up front, so no surprises.

It really is mainly the ERC to look out for, and if your product does not have that then you are save.

You'll probably be paying a higher interest rate but your aim is not to be paying it for very long, so that does not matter as much.

Thanks that's very useful and pretty much confirms my thinking...

dinosaur66

 

i am a few months younger than yourself /spend my time in essex and west kilbride  

/ i was offered a nationwide mortgage 2 years ago they said i could get up to age 75

so if i was in your position i would ask nationwide do they do a interest only 15 year SVR mortgage with no tie ins and £0 fees .

on 40k without looking it up i would guess £350 a month on 7% interest rate

if they do not do interest only any more then it would be £450 at a guess

then when your bond has finished use it to pay off the mortgage