Too old for small mortgage?

mamabuddah

I’m 69 my wife is 71
we will sell our current home (worth approx £170k) no outstanding mortgage
want to buy property circa £220k
our combined income is £40k (all g’teed pensions)
we have about £40k in savings
we have no outstanding debts

we think moving costs, buying etc we might need about £30k or £40k of a mortgage…possibly less just used £220k as a top end figure for easy calculations

using calculators we can see over 5 to 10 years for repayment (if available to us) we could easily afford the £300 to £500 a month which is obviously a lot cheaper than renting).

Is it feasible?

we had looked at this is the past…(but covid got in the way)…and it’s only now our (grown up) kids have finally settled and we want to live within 20 miles of them…(currently over 200 miles away 😢)

ACG

It should be possible. Its probably not high street though as I think most of the high street have a 5 year minimum term and it needs to be done by your 75th birthday - there might be an odd high street/normal rate lender available though. 

Speak to a broker. I think you can get there. 

(Only joking here) Or... Take the hint, 200 miles is close enough for in-laws if your anything like mine! 

whizzywoo

We were in a similar position, similar ages, similar income.

But we needed to borrow £80,000.  We couldn't get a short term repayment mortgage because we didn't pass the affordability if one of us dies.  Can't get life assurance on me as not yet 5 years clear of cancer.

However we are getting a Lifetime Mortgage.  It's a type of Equity Release.  We have chosen to pay the interest only and will probably clear it in a few years time with a possible inheritance which may or not become due.

You choose whether or not to let the interest roll up on the debt.  Or you can just pay the interest and / or make capital payments as well.  The choice is ours.  Because we've said we'll pay the interest for 10 years we get a slightly better rate of interest but we can stop paying at any time, the interest will increase slightly.

The amount owing can never exceed the value of the house.  So if you don't pay anything your children may be left with nothing to inherit.  There is a penalty of I think 8% of the balance owing if you repay within 8 years.  You can repay a maximum of 10% of the balance each year without penalty.

We have used it to buy a brand new house.  Sold ours a few months ago and are now in temporary accommodation until we complete on the new one in the next week or so.

You do need to go to a specialist mortgage broker or I believe StepChange will do it too.  We chose a mortgage broker who wasn't tied to a panel and the fees are £995 if it goes ahead.  You cannot apply yourself you have to be referred by broker.

The only thing I would say is that the conveyancing side of it is more long winded than usual and the mortgage broker needs to know all the ins and outs of your financial situation.  So that no one can say you were ill advised in the future.  Think disgruntled children when they have no inheritance.

But for us it's ideal.  We are getting a brand new house with no work needed, smaller garden, lovely garage and not one but THREE toilets (quite a luxury for us).  A wc cloakroom downstairs, a main bathroom and en-suite upstairs and it will easily take a stair lift if one is required in the future.  

ACG

Im not sure a lifetime mortgage is relevant here. 

MWT

ACG said:

Im not sure a lifetime mortgage is relevant here. 

Agreed, it is an 'if all else fails' option based on what has been written so far, but 'all else' shouldn't fail in this case with any luck.

Worthy of mention though as a lot of people not realise it can be used as a purchase option, not just to release funds from a property you already own.

poseidon1

whizzywoo said:

We were in a similar position, similar ages, similar income.

But we needed to borrow £80,000.  We couldn't get a short term repayment mortgage because we didn't pass the affordability if one of us dies.  Can't get life assurance on me as not yet 5 years clear of cancer.

However we are getting a Lifetime Mortgage.  It's a type of Equity Release.  We have chosen to pay the interest only and will probably clear it in a few years time with a possible inheritance which may or not become due.

You choose whether or not to let the interest roll up on the debt.  Or you can just pay the interest and / or make capital payments as well.  The choice is ours.  Because we've said we'll pay the interest for 10 years we get a slightly better rate of interest but we can stop paying at any time, the interest will increase slightly.

The amount owing can never exceed the value of the house.  So if you don't pay anything your children may be left with nothing to inherit.  There is a penalty of I think 8% of the balance owing if you repay within 8 years.  You can repay a maximum of 10% of the balance each year without penalty.

We have used it to buy a brand new house.  Sold ours a few months ago and are now in temporary accommodation until we complete on the new one in the next week or so.

You do need to go to a specialist mortgage broker or I believe StepChange will do it too.  We chose a mortgage broker who wasn't tied to a panel and the fees are £995 if it goes ahead.  You cannot apply yourself you have to be referred by broker.

The only thing I would say is that the conveyancing side of it is more long winded than usual and the mortgage broker needs to know all the ins and outs of your financial situation.  So that no one can say you were ill advised in the future.  Think disgruntled children when they have no inheritance.

But for us it's ideal.  We are getting a brand new house with no work needed, smaller garden, lovely garage and not one but THREE toilets (quite a luxury for us).  A wc cloakroom downstairs, a main bathroom and en-suite upstairs and it will easily take a stair lift if one is required in the future.  

I did, and am still considering a lifetime mortgage in future to replace traditional repayment mortgage once I pass age 70, for all the reasons you state. Will eventually be looking for £150 k to produce additional long term income.

Along the way I can service the interest if I wish using the 10% annual fee free capital redemption facility, or if don't wish to do so simply let the debt accumulate until death. However different circumstances from yours being single with no kids so not especially bothered about there being little or no  house equity left on death.

In the interim, my bank ( Barclays ) were kind enough to let me have a small ( £55k)  13 year repayment mortgage  commenced at age 66. Could have had 16 years for the asking.

Depending on who OP banks with can't see  a problem with  a 10 year repayment mortgage on their respective guaranteed incomes. Barclays coughed up the £55k entirely on the basis of the state pension alone, each of their incomes considerably higher for the £40k they have in mind.

whizzywoo

MWT said:

ACG said:

Im not sure a lifetime mortgage is relevant here. 

Agreed, it is an 'if all else fails' option based on what has been written so far, but 'all else' shouldn't fail in this case with any luck.

Worthy of mention though as a lot of people not realise it can be used as a purchase option, not just to release funds from a property you already own.

Yes indeed I did not know we could use it for a purchase and add the amount borrowed to the amount realised from our sale.

I only found out when we approached a broker about Life Insurance and a short term repayment mortgage.  Upon realising only one of us could get life insurance to cover the loan and we couldn't pass the affordability tests, the broker suggested the Lifetime Mortgage.  It's made a world of difference to us.

whizzywoo

poseidon1 said:

whizzywoo said:

We were in a similar position, similar ages, similar income.

But we needed to borrow £80,000.  We couldn't get a short term repayment mortgage because we didn't pass the affordability if one of us dies.  Can't get life assurance on me as not yet 5 years clear of cancer.

However we are getting a Lifetime Mortgage.  It's a type of Equity Release.  We have chosen to pay the interest only and will probably clear it in a few years time with a possible inheritance which may or not become due.

You choose whether or not to let the interest roll up on the debt.  Or you can just pay the interest and / or make capital payments as well.  The choice is ours.  Because we've said we'll pay the interest for 10 years we get a slightly better rate of interest but we can stop paying at any time, the interest will increase slightly.

The amount owing can never exceed the value of the house.  So if you don't pay anything your children may be left with nothing to inherit.  There is a penalty of I think 8% of the balance owing if you repay within 8 years.  You can repay a maximum of 10% of the balance each year without penalty.

We have used it to buy a brand new house.  Sold ours a few months ago and are now in temporary accommodation until we complete on the new one in the next week or so.

You do need to go to a specialist mortgage broker or I believe StepChange will do it too.  We chose a mortgage broker who wasn't tied to a panel and the fees are £995 if it goes ahead.  You cannot apply yourself you have to be referred by broker.

The only thing I would say is that the conveyancing side of it is more long winded than usual and the mortgage broker needs to know all the ins and outs of your financial situation.  So that no one can say you were ill advised in the future.  Think disgruntled children when they have no inheritance.

But for us it's ideal.  We are getting a brand new house with no work needed, smaller garden, lovely garage and not one but THREE toilets (quite a luxury for us).  A wc cloakroom downstairs, a main bathroom and en-suite upstairs and it will easily take a stair lift if one is required in the future.  

I did, and am still considering a lifetime mortgage in future to replace traditional repayment mortgage once I pass age 70, for all the reasons you state. Will eventually be looking for £150 k to produce additional long term income.

Along the way I can service the interest if I wish using the 10% annual fee free capital redemption facility, or if don't wish to do so simply let the debt accumulate until death. However different circumstances from yours being single with no kids so not especially bothered about there being little or no  house equity left on death.

In the interim, my bank ( Barclays ) were kind enough to let me have a small ( £55k)  13 year repayment mortgage  commenced at age 66. Could have had 16 years for the asking.

Depending on who OP banks with can't see  a problem with  a 10 year repayment mortgage on their respective guaranteed incomes. Barclays coughed up the £55k entirely on the basis of the state pension alone, each of their incomes considerably higher for the £40k they have in mind.

Yes our circumstances are different to yours @poseidon1
We would prefer to leave an inheritance to our children if possible.

We would also like to preserve our existing equity if possible in case things change in the future. 

If I were to be left on my own I would probably sell up and use the equity to purchase a property nearer to my daughter.  I know I could do this with the existing Lifetime Mortgage but if the loan is cleared or reduced there are more options.

poseidon1

whizzywoo said:

poseidon1 said:

whizzywoo said:

We were in a similar position, similar ages, similar income.

But we needed to borrow £80,000.  We couldn't get a short term repayment mortgage because we didn't pass the affordability if one of us dies.  Can't get life assurance on me as not yet 5 years clear of cancer.

However we are getting a Lifetime Mortgage.  It's a type of Equity Release.  We have chosen to pay the interest only and will probably clear it in a few years time with a possible inheritance which may or not become due.

You choose whether or not to let the interest roll up on the debt.  Or you can just pay the interest and / or make capital payments as well.  The choice is ours.  Because we've said we'll pay the interest for 10 years we get a slightly better rate of interest but we can stop paying at any time, the interest will increase slightly.

The amount owing can never exceed the value of the house.  So if you don't pay anything your children may be left with nothing to inherit.  There is a penalty of I think 8% of the balance owing if you repay within 8 years.  You can repay a maximum of 10% of the balance each year without penalty.

We have used it to buy a brand new house.  Sold ours a few months ago and are now in temporary accommodation until we complete on the new one in the next week or so.

You do need to go to a specialist mortgage broker or I believe StepChange will do it too.  We chose a mortgage broker who wasn't tied to a panel and the fees are £995 if it goes ahead.  You cannot apply yourself you have to be referred by broker.

The only thing I would say is that the conveyancing side of it is more long winded than usual and the mortgage broker needs to know all the ins and outs of your financial situation.  So that no one can say you were ill advised in the future.  Think disgruntled children when they have no inheritance.

But for us it's ideal.  We are getting a brand new house with no work needed, smaller garden, lovely garage and not one but THREE toilets (quite a luxury for us).  A wc cloakroom downstairs, a main bathroom and en-suite upstairs and it will easily take a stair lift if one is required in the future.  

I did, and am still considering a lifetime mortgage in future to replace traditional repayment mortgage once I pass age 70, for all the reasons you state. Will eventually be looking for £150 k to produce additional long term income.

Along the way I can service the interest if I wish using the 10% annual fee free capital redemption facility, or if don't wish to do so simply let the debt accumulate until death. However different circumstances from yours being single with no kids so not especially bothered about there being little or no  house equity left on death.

In the interim, my bank ( Barclays ) were kind enough to let me have a small ( £55k)  13 year repayment mortgage  commenced at age 66. Could have had 16 years for the asking.

Depending on who OP banks with can't see  a problem with  a 10 year repayment mortgage on their respective guaranteed incomes. Barclays coughed up the £55k entirely on the basis of the state pension alone, each of their incomes considerably higher for the £40k they have in mind.

Yes our circumstances are different to yours @poseidon1
We would prefer to leave an inheritance to our children if possible.

We would also like to preserve our existing equity if possible in case things change in the future. 

If I were to be left on my own I would probably sell up and use the equity to purchase a property nearer to my daughter.  I know I could do this with the existing Lifetime Mortgage but if the loan is cleared or reduced there are more options.

I suppose the point we are both making, is lifetime mortgages regardless of individual circumstances,  can be a flexible alternative to traditional repayment mortgages for those of us in our later years.
Despite its troubled past, modern lifetime mortgages with respected providers do offer manageable debt options for those of us that way inclined. I am only regretful that I did not take advantage of Nationwide's offering before they shut down that arm of their business in 2023.

whizzywoo

@poseidon1 our Lifetime mortgage is with Standard Life 

MWT

poseidon1 said:

whizzywoo said:

poseidon1 said:

whizzywoo said:

We were in a similar position, similar ages, similar income.

But we needed to borrow £80,000.  We couldn't get a short term repayment mortgage because we didn't pass the affordability if one of us dies.  Can't get life assurance on me as not yet 5 years clear of cancer.

However we are getting a Lifetime Mortgage.  It's a type of Equity Release.  We have chosen to pay the interest only and will probably clear it in a few years time with a possible inheritance which may or not become due.

You choose whether or not to let the interest roll up on the debt.  Or you can just pay the interest and / or make capital payments as well.  The choice is ours.  Because we've said we'll pay the interest for 10 years we get a slightly better rate of interest but we can stop paying at any time, the interest will increase slightly.

The amount owing can never exceed the value of the house.  So if you don't pay anything your children may be left with nothing to inherit.  There is a penalty of I think 8% of the balance owing if you repay within 8 years.  You can repay a maximum of 10% of the balance each year without penalty.

We have used it to buy a brand new house.  Sold ours a few months ago and are now in temporary accommodation until we complete on the new one in the next week or so.

You do need to go to a specialist mortgage broker or I believe StepChange will do it too.  We chose a mortgage broker who wasn't tied to a panel and the fees are £995 if it goes ahead.  You cannot apply yourself you have to be referred by broker.

The only thing I would say is that the conveyancing side of it is more long winded than usual and the mortgage broker needs to know all the ins and outs of your financial situation.  So that no one can say you were ill advised in the future.  Think disgruntled children when they have no inheritance.

But for us it's ideal.  We are getting a brand new house with no work needed, smaller garden, lovely garage and not one but THREE toilets (quite a luxury for us).  A wc cloakroom downstairs, a main bathroom and en-suite upstairs and it will easily take a stair lift if one is required in the future.  

I did, and am still considering a lifetime mortgage in future to replace traditional repayment mortgage once I pass age 70, for all the reasons you state. Will eventually be looking for £150 k to produce additional long term income.

Along the way I can service the interest if I wish using the 10% annual fee free capital redemption facility, or if don't wish to do so simply let the debt accumulate until death. However different circumstances from yours being single with no kids so not especially bothered about there being little or no  house equity left on death.

In the interim, my bank ( Barclays ) were kind enough to let me have a small ( £55k)  13 year repayment mortgage  commenced at age 66. Could have had 16 years for the asking.

Depending on who OP banks with can't see  a problem with  a 10 year repayment mortgage on their respective guaranteed incomes. Barclays coughed up the £55k entirely on the basis of the state pension alone, each of their incomes considerably higher for the £40k they have in mind.

Yes our circumstances are different to yours @poseidon1
We would prefer to leave an inheritance to our children if possible.

We would also like to preserve our existing equity if possible in case things change in the future. 

If I were to be left on my own I would probably sell up and use the equity to purchase a property nearer to my daughter.  I know I could do this with the existing Lifetime Mortgage but if the loan is cleared or reduced there are more options.

I suppose the point we are both making, is lifetime mortgages regardless of individual circumstances,  can be a flexible alternative to traditional repayment mortgages for those of us in our later years.
Despite its troubled past, modern lifetime mortgages with respected providers do offer manageable debt options for those of us that way inclined. I am only regretful that I did not take advantage of Nationwide's offering before they shut down that arm of their business in 2023.

One significant reason why this should never be the first option though is that there really is nowhere to go beyond that if your circumstances change after another 10-15 years or so, and you need to fund residential care for example, so you need to be sure that there isn't an alternative before you use the equity early.

... and although there is every intention to stop the interest from building up and consuming the remaining equity in the property, you have to be disciplined enough to actually follow-through and make the interest payments.

It is certainly a tool for those willing and able to use it wisely, but even now with the level of regulation that we have, it can be a trap for the unwary, that can leave people without the ability to down-size or fund future needs that were never anticipated when taking it soon after 55 or so....