Can I buy a house at 59years old. ?

[eighteenmonthstogo]

I lost my home in my divorce. Twenty years ago. We had barely 20k equity to split between us before fees. I think I ended up with about 7k. I went into rented where I have remained ever since. New DH and I had 7 kids between us so no chance of being able to save anything for a deposit. Rent costs have been eye watering . (1.5k for 12 years before we could get something smaller)

Anyway . I have been bequeathed £120k. I really want to buy our own home . But would need a mortgage of about £150k. an interest only mortgage would cost me approx £350 per month . I know interest only means the capital is never paid off - but at least I would be paying 700 pm less than my current rent and not servicing someone else's mortgage.

I will have a good pension (£17k) which I can claim at 60 (will partially retire and work enough not to take a dip in salary.) plus another lump sum of £50k. Full state pension at 67.
Current salary £42k and plan to work until 65. (V secure employment in public sector)

Any financial /mortgage advisers out there ? I have scoured the Internet for advice but it all talks about mortgages for 'over 55s' who already have houses (so equity release really) not new buyers.

It's nigh-on impossible to borrow past the age of 70 so you will have to pay off any mortgage or loans prior to that age. If you can't demonstrate to the bank your ability to pay it off by that date, they won't lend.

They won't do interest only either at that age for the same reason.

Borrowing criteria was tightened up years ago and it's now really strict. My own bank didn't want to know when I tried to remortgage (and I'm a bit younger than you).

The only thing you might be able to get is a 10 year repayment mortgage.

Use it for a buy to let. They mortgage past 70 and interest only. Let it out and overpay the mortgage and then you can live it in once mortgage free.

higher rate tax may be an issue depending on rental income

Speak to an mortgage broker. We did and got a mortgage at 57. But only for 10 year span. 70 years old was the cut off point.

My mortgage provider will lend up to 75 but they want proof of pension - so you may fit the criteria. Speak to a good mortgage broker and they will be able to advise you of the best options.

You may be able to get interest only if you are happy to sell or at least say you will sell to repay the mortgage at the end of the mortgage period. If you won't be able to make overpayments then this is a real risk which you should be aware of but with inflation going bonkers it will mean the repayment value will be significantly less if you can manage to keep paying as interest rates go up.

I don't understand. If you even get a mortgage in those circumstances, what will you do at the end of the mortgage term?

I just remortgaged my house on an interest only basis, 14 year mortgage and I'm 55, did not have to give any pension info. Santander.

Sell! It's a pretty good option.

Yes it is possible and if for some reason it doesn’t work then you can indeed go buy to key to get your foot in the market but not all lenders will lend on BTL if you don’t own a property.
in your circumstance you need to use an all market broker (fee free) just a phone call and you won’t have to go through the internet/ it’s very easy. Call L&C who used to be London and Country and are one of the biggest in the U.K., don’t mess about trying to do it yourself as you won’t be able to access the more niche lenders. You may have to accept a less competitive deal to get on the ladder.
www.landc.co.uk

I got a mortgage at 50 but was only allowed for max of 17 years. mine was for £140k which was 40% LTV and managed to fix at low rate for 5 years. Not looking forward to re-mortgaging !

Thank you everyone. That's been really helpful. It just seems crazy to me that I am paying £1000 in rent to pay for my landlords mortgage (if they have one) but can't raise a 50% -60% mortgage to buy my own property.
Especially when my occ pen and state pension together (for the rest of my life) will be greater than my current salary !

It does seem illogical. Surely 'the risk' is always that the mortgagee doesn't pay and the house is ultimately repossessed but in my case their will be 120k in equity from the start so surely their money is safe should I decide to develop a drink drug and gambling habit in old age. ? ...and if I die, then the house is sold and the mortgage cleared .

To me it makes little sense. I thought banks wanted to lend to safe bets. I cannot see why my position is regarded as one. ?

One last question. Why is a buy to let a more likely option ? Again I cannot see the logic in agreeing to lend money to someone to buy a house to rent out .. when it would mean me continuing to spend 1k a month renting.. surely making my 'affordability' a lot dodgier ?

BTL affordability is not based on your income, it is based on the rental value of the property. They don't end at 67 or 70. You have a large deposit. They are interest only- you wont get an interest only domestic mortgage at your age.

My repayment mortgage for £295,000 is £438 a month interest only (but rates have gone up a bit since start of the year)

I think you need to speak to some mortgage brokers, interest only sounds a crazy risk - you need to end up with something at the end of it when you're retired -otherwise it's pointless (to me). You'll be back at square 1

I disagree that interest only is a crazy risk if the OP is going to be paying significantly less on her mortgage than her current rent, plus the initial capital investment is likely to grow in the long term. So she won’t be back in the same position. She can always downsize to a one bedroom flat in the future. Given that the OP has a decent occupational pension it’s likely that a mortgage provider would be willing to lend past 70 - Virgin Money go to 75 if you can prove pension income. There is also the option of part repayment, part interest only. I would go for the latter. When she receives the lump sum from her pension she will be able to repay some (or all) of the interest only part.

Find a free, all of market mortgage advisor, they'll be able to find you the best deal if there is one and give you a yes or no based on your circumstances

What’s your DHs contribution to all of this?

Speak to a mortgage advisor (you can get free advice), you can afford a repayment mortgage over 11 years based on your figures? In which case why not do that and I'm sure you can get a standard mortgage. Failing that I'm fairly confident several mortgage lenders go over 70 now so you can probably get a longer term and use the pension lump sum to pay off the difference? Either way speak to someone and I'm sure you'll get better advice.

Your 17k work pension & 10k state pension is less than your current salary of 42k though?

This! You don't need any specialist advice or special mortgages. Just a big standard normal one from a lender happy to lend till you're 70 which is most of them.

If you're getting a £50k lump sum next year then you only need borrow £100k over 10 years which would cost around £1000 a month - same as you're paying now, except you'll own it outright in 10 years time.

Some mortgages go up to 75 or more. e.g. Platform which is owned by Coop and available through mortgage brokers. Metro Bank go up to 80 and seem quite flexible in a few areas. Google 'Metro bank intermediary lending criteria' to see what I mean.

We nearly went with Metro but ended up getting what we wanted with NatWest at a lower rate (well touch wood, haven't exchanged yet!).

NatWest lend up to 75 but it is reduced to 70 if you have an interest-only element. I think they allow up to 50% of a property value as interest only. They accept sale of property as a repayment vehicle, you don't need to provide pension information. However, to be eligible for an interest-only element, one person needs to earn minimum £75k or have combined income of £100k.

Probably best to talk to a whole-of-the-market mortgage broker giving them full details of your situation. e.g. L&C

Nothing. He was a victim of a hit and run RTA 3 years ago.. we live separately due to his volatile behaviour since head injury .. but are very much married..(go and stay with him 3/4 times a week but not appropriate to have him at home with the children.. (18, 21 and 24 - far too much drama for them)
he will be due a significant payout from the MIB (motor insurance bureaux .. but even though it's 3 years since the accident he is not due his medico-legal assessment until next January. I do not want to rely on that in any way as regard it as 'his' for all the trauma he has suffered.

YBS may be worth looking at too and nationwide. My FIL has a mortgage with YBS till age 74, took out at 64. However think you'll struggle with the interest only element as you normally need certain income unless buy to let.

You could try a repayment on the basis that you'll continue working till 68 on 42k a year, that would give you the affordability now and it shouldn't be higher than existing rent but then obviously if you wish to retire earlier than 68 you'd need to switch to a diff mortgage. May be easier to do as existing customer once you've got higher LTV but would be risky as a strategy.

Why would she need to change lender? If she stays with the same one they're unlikely to ever need to check she's still employed as long as the mortgage is being paid.

@titchy I didn't say different lender. I said different mortgage on the basis that a 9 year repayment mortgage based on her 42k income is likely to have a higher payment than she'd afford when she isn't working and is on her 17k pension. If she can continue to pay the monthly repayment then of course she doesn't need to change anything but I presume OP wants to keep to low repayments hence the interest only idea because she doesn't want the high repayment that would come with a repayment mortgage

What im trying to say is take out a repayment mortgage now, you could easily borrow 150k on your salary but you'd have a high repayment as it would be on a short term. But you could say you were planning to work till 68 or whatever.

If you want to retire earlier, then try and move to interest only, by that point you'll have more equity and also be an existing customer. That said my FIL was able to use pension income to get the mortgage to 74 I mention above. But the borrowing was only about 60k. You wouldn't get 150k on your pension, so I'd take it out on your salary and try and pay it down for a few years.