Brother 60 years old, can he get a mortgage?

Spint

If you would please take the time to read the scenario, I would be extremely grateful for advice especially as it's quite urgent as wheels have been set in motion. Also, if you feel you can even offer your services too to seal the deal.

Firstly, I am representing my brother as he is working hard this week and doesn't have
the time.To cut along story short, he is approaching 60 years old and is renting. He used to
have a house but his now ex-wife literally bankrupted him throughout his life and now has very little. As said it's a long story but I don't know a nicer guy who has had so much bad luck. His problem was that he was too nice.

Anyway, he has seen a property and offered £95K for it. The offer was accepted last
week and he has a mortgage agreement in principal only. Being the sort of person he is, he just went with his own bank to apply. Of course, it's too early to know but upon reflection I have a feeling the application will fail because of his financial circumstances. He has applied for a repayment mortgage that ends at 75 years old.

He earns about £31k per year. His only debt is his car which is £233 and has less than 4 years
left to pay. He has a £5k deposit.

Unfortunately, when he retires, he will mostly be relying on his state pension. He should also get only about £5k per year from his company and forces pension, although he's hoping to ramp that up.

So using a mortgage calculator, his mortgage will be about £713 per month. The main caveat comes down to when he retires, where he will mostly be relying on his state pension. I think the bank will then realise he can't afford it.

The sad truth is that he will be eventually able to afford it because two things that will most likely happen. First, by the time he retires it is very likely that our parents will have passed away so from the share of selling their house, he'll simply be able to pay it all off. Secondly, it is likely he'll find a partner (preferably in a similar situation) so with a combined income or pensions, they can afford it.

Also, there is an option where he might be able to get £20k to add onto the deposit. This would be from my other brother, where it will only be paid back through the sale of our parent's home after they've gone.

With these options, who are the best mortgage providers that will be the most
accommodating. What must he do or say to increase his chances?

I was wondering if an interest only mortgage would give him a better chance as he would only be paying half the amount albeit more interest to pay overall, but the way I look at it is he would only be paying more in rent (dead money) if he wasn't able to pay off the outstanding amount at the end of the term.

Thank you very much and hope you can help.

El_Torro

There shouldn't be a big issue with someone who is earning £31k a year to get a £90k mortgage. The main thing being that if he is getting the mortgage to 75 then he'd better say that he is going to work until 75. Otherwise I don't see why any bank would give him a mortgage to that age.

I don't think that an interest only mortgage is viable. Lenders usually want a large deposit when lending interest only, 50% or more.

Baldytyke88

I got a 10-year fixed mortgage when I was 56, I had a large deposit, but I only earn around £20k

So mortgages for older people are possible. My mortgage will be fully paid before I retire at 67

Catonthemoon

The sad truth is that he will be eventually able to afford it because two things that will most likely happen. First, by the time he retires it is very likely that our parents will have passed away so from the share of selling their house, he'll simply be able to pay it all off. Secondly, it is likely he'll find a partner (preferably in a similar situation) so with a combined income or pensions, they can afford it.

I would imagine that Banks/financial institutions would work on hard facts/certainties rather than ifs, buts & maybe’s!

I can see where you’re coming from but I just don’t think you’d be able to present a convincing argument to them as to why it’s viable.

‘Anything’ could happen to alter what you might be considering a certainty.

Hope it works out for your brother.

Cotm

poseidon1

What is currently in your brother's favour is his immediate ' guaranteed' employment income of £31k.

However unless his job does offer the certainty to continue working way beyond his state retirement age, mortgage underwriters may well be concerned about his ability to maintain payments solely on state pension and his very small occupational pensions.

You mention a number of what if scenario such as potential inheritance, meeting another partner in similar circumstances, etc which might mitigate his future ability to maintain/ afford the mortgage.

No lender will be interested in considering these as realistic factors in the immediate decision to grant him a mortgage at this time. They are unknowns.

As for the future 'inheritance', not clear to me why you raise this as a possibility for any of you and your siblings. In a post you made earlier this year you intimated your father took out maximum equity release on family home with annual interest progressively eroding remaining equity. What has changed since February to make a sizeable future inheritance a liklihood?

On a more positive note I had to seek a new mortgage from Barclays at age 65. I had no guranteed income sources but significant annual investment income. Barclays rejected all of my investment income as a basis for mortgage funding based on none of it being 'guranteed', but at age 66 when the state pension came on stream they were happy to advance £55k repayment mortgage to age 81 which I took. However this was completely risk free lending for Barclays on a property I already owned worth £420k.

Hopefully the property your brother is considering a freehold house rather than a leasehold flat, where lenders are currently becoming more risk averse with their lending criteria.

Spint

Thanks for all your help, most appreciated.

Regarding the future inheritance, I mentioned it because despite the equity release my father took out, I now realise there will be most likely enough for my brother to pay back the £20k at minimum. I don't care if there's nothing left for me.

That said, if this application fails what should he do next? Should he apply again to the same bank with the extra £20k if my other brother agrees to lend him it? Should they lie by simply declaring it as a gift?

Also, I realise the sticking point is what actually happens at retirement age meaning when he stops working. When applying for a mortgage, is there a section where you declare that you will and can work past the age of retirement? Do lenders require proof that the company he works for allows him to work past retirement? It would seem that if he did retire at the retirement age then about 60% of his pensions would go to the the mortgage.

Other than a bigger deposit, what can he do to increase his chances of being accepted (if this one fails) whether it's trying a specific lender or a type of loan or anything else? Do you think the extra £20k would actually make a big difference?

Above all, the absolute priority is to get a foot back on the ladder and if that means bending the truth or taking out an expensive then so be it. In fact, if this one does fail, is that a black mark against other applications?

I'm just trying to find out how he can maximise his chances where if he is turned down yet again, then at least we can all say there were no other options left. Apologies if I sound repetitive but hope you can understand what I'm getting at.

Thanks again for all your help and any companies, lenders or folks that you can recommend.

P.S. Yes, it's freehold, he made sure of it!

Keep_pedalling

Not only will you need to declare it as a gift, it will actually have to be a gift.

saajan_12

There's no magic words you can utter or shiny suit you can put on to impress the bank manager. They would never take potential relationships and inheritances into account - the parents may use the money for their care, he may not meet anyone (!). All the shenanigans with family loans are also foolish, its just asking for trouble if he doesn't get the expected inheritance at the expected time, and it causes a wedge among brothers. Not worth it. Also interest only is a non starter fo rhis primary residence with a modest deposit.

I would just go to a broker to fidn out what lenders will allow the longest repayment period for his age, apply for a DIP and then a full mortgage application. If that fails then simply rent.. its not dead money any more than interest and money on house maintenance is.

gwynlas

I would ask a whole of market broker for advice.

The question is always of affordability which he meets with his current salary but might not with retirement income.

However he is presumably paying rent which would be ongoing into retirement so this might match mortgage payment,

Also if he is prepared to have a lodger he would benefit from the rent a room scheme

Spint

Thanks for all your advice and wisdom.

Just to let you know, he got the mortgage with his £5k deposit.

Thanks again.

Silvertabby

When is his Forces pension due? If he left before, say, 2000, then his preserved annual pension plus a tax free lump sum of 3X pension is payable from age 60, not SPA.