Over 60 Mortgage: starting again

Farmer_jones

Hi all

Long story as to how I got to this point in time, ..however I am 61 and now want to buy a property to live in, however there are a few things puzzling me. Essentially I have a decent deposit (10% of property value) and have been told I can get a mortgage for 15, maybe 20 years. I am lucky as I have a very well paid job so the mortgage is affordable.

Where I am puzzled is what happens to the mortgage payments when I retire ? I am scheduled to retire at 67, and will probably leave my current employment at 68 / 70 years of age. That's only a few years away: I don't have a huge pension fund and will most likely continue to work into my 70's.

Could I / can I change the mortgage to an interest only mortgage to ease the payment burden at the point where I start to wind down (aged 70) ?

(I am renting at the moment and am desperately trying to avoid the situation were I retire & cannot afford the rent…..)

Thanks for reading, and any advice / thoughts will be gratefully received.

MWT

https://forums.moneysavingexpert.com/discussion/6676833/over-60-mortgage-starting-again

The ability to get a 15/20 year mortgage is tied to your ability to demonstrate that you will be able to afford the mortgage through that period.

It doesn't sound like you can if you do not foresee working beyond 70…

There are interest only options like a 'RIO' product but they will want to see that you have sufficient guaranteed income in retirement to meet their affordability tests.

Can you afford to just get a normal mortgage but run it over 10 years or less?

ACG

By going to 75-80, that requires you to say you will work until that age.

If you retire before then, it then falls on you to be able to afford the repayments until the point it is paid off.

You could (but it is risky) do the mortgage over the maximum term to help with repayment. When you plan on retiring the LTV should be a lot lower. At that point you might find it easier to get a Retirement interest only mortgage.

However you are relying on:

• Your credit being ok.
• Lenders still doing those types of products in 20 years.
• The mortgage being affordable.
• The LTV being in line with where it needs to be.

If not, then you have a choice of either downsizing or carry on working I suppose. Not something I would recommend but at the same time it is something I would potentially consider myself depending on my appetite for risk at the time.

I think it would be wise to sit down with a broker. They can go through your options, the pros and cons etc.

MWT

Equity Release also becomes an escape route once the LTV has been significantly reduced and being 10 years older helps with that as well…

georgehere

I'm only repeating what others have said but you need a plan to pay the whole mortgage off. The most likely scenario is you must pay it all before you stop working - so if that's 10 years from now can you afford the repayments for such a short mortgage? Eg a £200k mortgage over 20 years at 5% would be £1,300/month but over only 10 years would be £2,100 a month.

• Can you work until you are older, giving more time to pay back the mortgage
• Can you choose a more affordable location/smaller property to make the numbers work with a short mortgage
• Can you find more money to increase the deposit - that might be very painful but if the house is your absolute priority you might decide to go that route now and work out your retirement income later
• Might you inherit money / get a redundancy windfall that will cover a chunk of the mortgage and you just need to make payments until that time
• When you retire do you have a guaranteed pension plus state pension that is substantial enough to keep on paying for a few years to finish the mortgage off

Essentially, try to figure out the plan that works / is least difficult. It could be a mix of the above - once you have an idea of your approach if you come back and post the details with numbers you will find many people who will help you refine the plan or maybe suggest improvements.

Bigphil1474

Op, we got a new mortgage when I was 53 (previously paid off), took it out over 14 years to make sure I could pay it off before retiring. You need to be able to afford the full term. If you have a very well paid job, I'd say use the wage to pay it down as quick as you can so you can live rent free in retirement. Depends what you mean by not a huge pension fund. I'm expecting to be on about £35k when I retire, which is fine for me when I'm mortgage free.

thegreenone

How much would you get in your tax free 25% lump sum? Factor that in, if you haven't already.