Advice on what to do re our housing situation as we approach retirement.

[Cherubneddy]

I’m 54 and DH is 51. We have my 12 year old DS living with us. We currently rent. Due to previous relationship breakdowns for both of us we are in a precarious financial position. I have a poor credit score ( although it is rebuilding) due to defaulting on debts following financial abuse in my previous marriage.

We hate the lack of security from private renting. We currently pay £950 a month for a 3 bed house in a lovely village, but are aware our landlord could decide to sell up at any point. We’re starting to think about retirement and what our housing/ financial situation will be then.

The one thing we do have in our favour is we are both in full time permanent, stable employment. I have a good local authority pension, DH has a pension too, albeit not as good as mine. We earn approx £82k between us.

Im aware my pension won’t go very far as we’ll need to continue paying rent into our retirement and won’t be eligible for any benefits. We have no savings currently, although I will get a lump sum as part of my pension.

We looked into shared ownership/ right to buy ( if we could manage to get a mortgage with my credit score) but we are over the £80k income threshold, same for renting a housing association house, which would have also given us some security. Because of our ages a mortgage on buying a property outright wouldn’t be affordable as it would need to be over a max of 15 years probably, making the monthly payments too high.

What would you do?

Yes
but given the op had not mentioned as an ongoing and future obligation in the Op
and somewhat relevant
it was certainly not out of realms of possibility… he did not pay maintenance
hence me asking… if he did

Your rent is low and your salaries are reasonable.

Throw £2k a month at the debt and it could be paid off within a year.

Then save £2k a month for a year and you have a 10% deposit.

It might mean living a very basic lifestyle for a bit but plenty of people do that to buy a house.

Can either of you get an extra job?

I agree how people can't plan for the future I just don't understand

lucky you!

Do you need to run two cars? Cars are incredibly expensive now and with insurance, tax, fuel and the cost of car payments it's hundreds a month - if you could manage with 1 car and using public transport you could potentially free up some hundreds a month to save?

What were the debt repayments for??

On your salary with quite a low rent (compared to the south) can't you save anything?

I'm not sure why your position is so precarious - is your DH still paying towards his former wife?

Assume you will be working until you are 67 (or longer if the rules change before then which is likely). So you are quite early to be thinking about retirement soon. If you want to retire early, basically, you can't. You don't have enough money to do this. If you tighten the belt now, put more money into your pension now, by the time you require then you should have a reasonable nest egg.

Also if you have a generous LA pension a bank may well lend to you for a mortgage term that extends beyond retirement age. Of course you can then over pay /use your lump sum to pay it off when you reach that age.

I managed a 200k mortgage and 1k /month nursery fees (plus Legal debts from getting a non molestation order) as a single mum to two on 35k a year after my ex left so I am fairly sure you can both do it. I went without anything new/any treats for myself for a couple of years but it was worth it.

My own mortgage will run until I’m 75, so you’ve got at least a 20 year option. You could buy a place in a cheaper part of the country to buy, and rent it out, while continuing to rent yourselves atm, until you retire there.

Look for an ex council house to buy, you get more house for your money, whereabouts in the north do you live? Lots of people are now still paying mortgages in retirement, look on a mortgage calculator to see how much you could borrow for what you pay in rent, you would need a deposit, so try to save for a couple of years towards that. Re shared ownership, do they take salary without deductions for the income limit? If not could you pay extra into your pension until the sale goes through?

I think you need to speak to a mortgage broker and find out what your options are. You are paying more in rent than I pay for our mortgage. You could be paying that amount towards a mortgage for the next 15 years at least - this would be a huge dent in a repayment mortgage. Then once retired you will have to budget to pay mortgage from pension until clear. If you were still renting you’d have to pay your rent from your pension.

speak to some professionals and make the next 15 years really count.

Use your husbands pension lump sum at 55 to put a deposit on a house. We were in a similar situation as you, and in our mid fifties got a twenty year mortgage. We have been overpaying and it should be cleared well before twenty years, more like ten.

Play around with some mortgage calculators, and see what houses you could afford, you would be surprised how much even a small overpayment knocks off the mortgage term.

Also mortgage payments seem a lot less over time with inflation, so in 10 years you would probably be able to pay it off.

Hi

Which part of the north are you in? There are plenty of places you could buy somewhere cheaper than £220k. That might not be the area you live in at the moment but may be worth considering as you approach retirement.

How much are your pensions projected to be? If long term LGPS members working full time that might help a lot with mortgage payments.

With a £20K debt to service, no access to shared ownership and having no savings, you both aren’t in a great position to get a mortgage. I think you should both get second jobs, and have a really lean year chucking as much as you can on the debt. Then save like crazy for a year, even if you can only afford a two bedroom flat in, say, Sunderland or Hull, to rent out. You don’t want to be renting in your seventies and beyond.

Good idea but check ages for your local area. Mine is 55 with a medical condition otherwise it's 60.

I’d throw everything I could at the debt to get it cleared asap. Stop spending money - calculate what you can afford and pay that off your debt as soon as you get paid. Speak to the credit card companies and enquire about freezing the interest ?
Give your daughter an allowance for clothes etc. she can get a job for any extras she needs! Food budget and stick to it. No holidays or weekends away for a week, free activities at the weekends only. Then another year saving as much as you can. You are both too young to be thinking about retirement ( which you can’t currently afford anyway). Aim for 67 for both of you for retirement and see what you can afford to buy with a 15 year mortgage. You have a good income between you so obviously there has been some overspending somewhere ? Are your cars financed ?

Op you're frittering money away on something but your financial future/security is hanging by a thread.

Your net joint income, minus rent, is £4000 a month. It doesn't cost £1000 a week to run 2 cars, pay bills and feed teenagers. I know this because I have WAAAAAAY less take-home than you, manage all of the above, and still manage to save more than a couple of hundred quid a month.

It sounds like you are still making poor financial choices. You need a complete overhaul of your finances to figure out where the hell £4k a month is going. On your joint salaries you should be prioritising paying off that £20k debt and saving HARD for a deposit.Go through every penny that's been spent this year and how much of it you've wasted on shite rather than on securing your future. Get a spreadsheet going. Hell, even a back-of-a-fag-packet calculation and I reckon you could be saving £2k a month towards your future. It might be really tough for a couple of years while you change yours and your DC's mindset.

£82k a year income is really quite a lot if you're living oop North. You CAN do this op. Find a lender who will lend up to your 70s then overpay like mad so that the pressure of debt into retirement eases.

You have decent incomes and good pensions, that’s brilliant.

Buying is definitely not out of the question for you, and will give you so much more security in your old age. I would make that your primary goal. Ruthlessly examine your spending and make all the cuts/switches/efficiencies you can bear. Don’t be overly generous with teenagers, they are ungrateful money pits and will benefit from learning good budgeting as well. My DD17 is an absolute demon on Vinted for example, she hardly ever buys new clothes.

Good luck!

We earn approx £82k between us

Was not expecting to read this at the end of the OP.

How much can you afford to save per month? How would you feel about retiring to a cheaper area?

I agree with pp that it sounds as if you could be living more cheaply if you wanted.

OP I was in a similar position to you myself, partner on a DMP and good credit for me bad for him.
I think you’ll have some difficulty until the debt is gone, 20k you said? We had to pay off around 15k before our mortgage applications were accepted and even then only with interest rates from specialist bad credit lenders which were unaffordable. Our joint income was higher than yours.
We waited 2 years and then applied again and this time got a high street lender with a normal interest rate.
I would absolutely get rid of the debt first because the lender will look at affordability and you guys already have some considerable commitments. Also similar age to you on a public sector pension.
incidentally we also had to put down a 10% deposit so it’s not quite as clear cut as previous posters suggest.