Lifetime mortgage

wally2

I’ve recently had a valuation for a lifetime mortgage and because my property has no gas central heating the application has been declined. The mortgage broker stated that no mortgage company would give a lifetime mortgage to a property without central heating. Is this true as surely there are a lot of properties without central heating? 

Linton

I would expect it to be true.

Where a lifetime mortgage differs from standard mortgages is that the mortgage company is dependent on the house selling easily to get their money back. Therefore they will be very wary about any factors that could make a sale particularly difficult.   With a normal repayment mortgage the mortgage company gets their money back over time from the borrowers and the forced sale of the house is just a rarely used final resort.

The same issues witll also apply to Equity Release. 

whizzywoo

We are nearly at the end of the process of getting a lifetime mortgage.

We are using it to supplement the monies received from the sale of our old house and we are buying a new build house.  So the new build house will be the security for the lifetime mortgage and will be approximately 30% of the total purchase price.

We have had to jump through an incredible amount of hoops to get to this stage and hope to exchange in the next week or so.  They are very very picky when it comes to which houses they will lend on.  That's after you have satisfied their criteria for you personally.

At the end of day it is understandable.  We will be paying the interest on the loan and a little bit more besides and hope to clear it completely in a few years with a possible inheritance.  BUT we don't have to pay a penny in interest or off the capital if we don't want to. 

So if we decide to just let the interest roll up and we live another 30 years or so the amount owing will be very high.  The amount owing will possibly be more than it's value in 30 years and they will just have to suck that up.  They need to be as sure as possible that they are not left with a house they can't sell to go towards paying off the debt.  They cannot charge any outstanding debt to the estate of the survivor.  It's an insurance risk for them and that's why they are so picky.

MWT

wally2 said:

I’ve recently had a valuation for a lifetime mortgage and because my property has no gas central heating the application has been declined. The mortgage broker stated that no mortgage company would give a lifetime mortgage to a property without central heating. Is this true as surely there are a lot of properties without central heating? 

How do you currently heat your property?

The last Government numbers I saw for this were from about 2022 I believe:

"The main heating system in properties has remained consistent over the past 10 years. In 2022, 92% (22 million dwellings) had central heating and 5% (1 million dwellings) used storage heaters..

While just 3% (761,000 dwellings) of all housing stock in England used a portable heater as their main heating source"

There is no specific requirement for the central heating to be gas, but the lenders are not going to be happy with a heating solution they would perceive as likely to put off a buyer...

wally2

There are sockets for storage heaters but I don’t use them . I have an open fire in one room , a gas fire in the second room and a panel heater in the bathroom . 

MWT

wally2 said:

There are sockets for storage heaters but I don’t use them . I have an open fire in one room , a gas fire in the second room and a panel heater in the bathroom . 

That sounds like you have no heating in the bedrooms?

How many rooms in total in the property?

When you say you have sockets for storage heaters, hopefully you don't just mean 3-pin sockets as typically storage heaters are directly wired to a separate circuit and connected to a 5-port meter which can switch the circuit to provide power to the heaters during a low-rate period overnight.

Modern storage heaters may also require a permanently live connection as well of course.

wally2

There are electric heaters in the bedrooms but rarely used as it’s a hot house . The sockets are the economy seven sockets . There’s two reception rooms and a kitchen downstairs, three bedrooms and a bathroom upstairs. It’s an old property with stone flag floor in the kitchen, wooden floorboards throughout and tiled hallway. 

MWT

Was it just the lack of heating that was raised or were there other concerns about the construction of the property?

Does the broker you are using work with a narrow panel of lenders as some in the Lifetime mortgage business tend to do?

I suspect that your property as it is now, is probably not suitable for a Lifetime mortgage product, but you do have at least some of the required infrastructure to install night storage heaters, but it would be worth asking if that would be sufficient, or if there are other issues as well...?

Similarly you could try another broker/advisor... somewhere without an advice fee like StepChange perhaps, unless that is who you have been using so far...

I'm sorry you are having problems with this path, but not all property is suitable unfortunately. 

wally2

It was mainly the central heating however he was barely there for ten minutes and didn’t ask about the economy seven sockets . He said that he needed to take photos but only took a photo of one room . 

MWT

wally2 said:

It was mainly the central heating however he was barely there for ten minutes and didn’t ask about the economy seven sockets . He said that he needed to take photos but only took a photo of one room . 

They are there to assess if the property can be sold quickly, and if the current condition suggests it is being well maintained as that is a guide to how it will be maintained in the future, and of course its value.

That means they will place a lot of importance on the immediate impression they get on arrival and they will be very judgemental about things like clutter around the house.

It feels like they made up their minds that this was going to be a 'no' pretty much immediately, unfortunately.

You can still try again with another route like StepChange for example, but have a think about how the property looks to someone who has never seen it before and be prepared to point out the E7 provision that is already there if needed.

Being completely honest with yourself, does the exterior look well maintained? ... windows, fences, roof in good order, garden neat and tidy etc. ?

Internally, lack of clutter is the big thing it seems, and of course the general state of repair. Doesn't have to look like everything has been redecorated last week, but it shouldn't look like it should have been redecorated 5 years ago either.

If you do try again, be very clear upfront on the lack of existing central heating but point out the E7 wiring.