£525k mortgage at 47?

[snoktruix]

Hi all,

I'm in a somewhat difficult financial situation. Due to general lack of financial acumen and foresight.. my partner and I (i'm 47, she 45) are still renting in central London (about £2.6k pcm). We only recently came to the giant realization that we are doomed in later life if we don't get on the property ladder. So we are thinking to finally buy a flat.

I do in fact have a buy-to-let property (worth about £360k, with £250k left on the mortage), but can't release the equity on it due to cladding problems which will take years to resolve.

We have about £100k in savings, and parents can help to the tune of about £70k total with stamp duty and deposit. So we are considering to buy a 2-3 bed flat in London, for around max £625k, with a £100k deposit leaving us with £525k mortgage and some savings buffer. (Due to the unsellable buy-to-let, we would need to pay the higher stamp duty rate unfortunately, but no way to avoid it).

Due to our age, this would need to be a 22 year term, so the payments will be on the order of £2.5k pcm, at the current rates. Our combined income is about £160k (that figure includes bonus).

Do people think this sound like a viable plan? I realize that taking on this level of debt, and payments, at our age is risky. But the alternative of renting into oblivion, with no other asset than that buy-to-let, seems worse. We seem to be a the point where it's do-or-die to get back on the ladder.

Any thoughts appreciated...

Best wishes
Jim

I think you could get a 2 bed flat for less than £625k, I've just searched for Chiswick on rightmove and found some there. Someone with more local knowledge would be able to advise on the best areas.

This is a 2 bed flat in in Chiswick for £425,000 with a share of the freehold: www.rightmove.co.uk/properties/101939129#/?channel=RES_BUY

A lower mortgage would make it less stressful and cheaper. I do think it's a good idea to buy so you won't have to pay rent in retirement.

@snoktruix We’re in Greenwich. Our development doesn’t count as a new build anymore (20 years old) but I know there are flats on the other end of Greenwich, which are new build and smaller than ours which start at around £625k.

Honestly, look around. You can get a decent 2 bed flat in a nice part of London for less than £625k.

I have a 2 bed in east Finchley zone 3 which is worth about £400k. It's a 1930s block with communal gardens. Near lots of hospitals too- Whittington, royal free, Finchley memorial etc.

I am only looking for a 3 bed flat now as planning a little one but if I didn't have any, I would happily stay in my 2 bed flat for life.

@theleafandnotthetree

I think at your current stage of life I would prioritise location and buzz over size and buy something which leaves enough money to actually enjoy all that London has to offer. Maybe at a different stage of life you'll want something different, this doesn't have to be it forever.

Yeah, we don't feel too comfortable with the idea of relocating to a commuter town. Maybe if we had kids.

"Buzz" seems hard to achieve though at a £600k price for 2 bed, unless we go very small (or suck it up and live in a 1-bed). We are OK with being a walk/cycle and a couple of tube stops from the buzz though..

@PinkWednesdays we also paid higher rate as we had a house rented out. Then a family member with a buy to let moved and told us they were not paying higher rate as the purchase was for their main residence.

We investigated and found out that was correct but we were past the 18 month reclaim window. So we're currently in the middle of a professional negligence case against the solicitor who misadvised us that we had to pay higher rate.

Apparently lots of solicitors are getting wrong!

Is ‘buzz’ worth more than financial security?

(Due to the unsellable buy-to-let, we would need to pay the higher stamp duty rate unfortunately, but no way to avoid it)

Is this property in your name? Are you married?

I believe if you aren’t married/civil partnership you can own a home each without incurring the higher sdlt rate.

@Nomoreusernames1244

(Due to the unsellable buy-to-let, we would need to pay the higher stamp duty rate unfortunately, but no way to avoid it)

Is this property in your name? Are you married?

I believe if you aren’t married/civil partnership you can own a home each without incurring the higher sdlt rate.

So put it in my partner's name? Interesting idea, I hadn't thought of it.

@CrimbleCrumble1

Is ‘buzz’ worth more than financial security?

…but you can have both. OP is working on getting both, rather than a bigger house outside London. Honestly it’s only on my Mumsnet that I see this obsession with buying large houses in non desirable places. They’re cheaper for a reason, because quality of life isn’t great. If you’re used to Central London, buzz isn’t a sacrifice you’re willing to make.

@CrimbleCrumble1

Is ‘buzz’ worth more than financial security?

In general I agree it's not (at our stage of life anyway). More concerned with good transport to wherever we work, as a long commute on a regular basis could be quite grim though. And also to some extent, on living in a place which feels safe/friendly and has some decent amenities.

I think it's fine - sell the rental when you can and pay off some of your mortgage.

How do your parents feel about your inheritance flowing to the Philippines? Whilst you don't have children and it shouldn't matter I do think you need to protect yourself in case of death and divorce.

I also think go for it - if you decide you no longer want to pay the mortgage at any point, you can always move somewhere cheaper than. Life is for living! I think it's only on MN that people have their mortgages paid off and are thinking towards early retirement in their late 40s. I am your age and don't know anybody in that position!

@Flowers500 I wouldn't say they are undesirable places per se, just places that aren't really suited to 2 full time London workers. Whether the property is 300k, 400k or 600k, OP needs a good income to pay back the mortgage and while it is all very well for posters to suggest he get a new job with Flexi working or for partner to find another job, the point is there is no guarantee that they will get those jobs or they will continue to have jobs in those locations outside London (which is a concern given they are still 20 years away from retirement age).

I had the same problem 2 years back when I was trying to buy in London where people were telling me to buy outside London with a budget of 400k. However I have yet to meet anyone where both husband and wife worked in London but lived outside London . So I bought in London as I have little hope of finding a job in my industry outside London and when I do have a child, I don't want to have to find any local job so my DH can work in his investment bank in canary wharf (I earn much less than my DH) and even now he is going in everyday.

I don’t know what people are trying to talk you out of London. If you want to live there live there. It’s great, especially if you don’t have kids.
People are desperate to sell flats in London atm, so you’ll be able to get a good bargain. Might be worth looking at 2 bed houses though too - could just about get one in some areas zone 1/2 and it’s just nice not having to deal with upstairs/ downstairs/ service charge. And Freehold tend to hold value better.

This is just on the cusp of zone 3 but just by a nice high street (gails, indie coffee shops, cook, M&S) on the district line and between two parks (Wimbledon park and common) so it is also possible to spend less in London if you did want a lower repayment (or less years) too

www.rightmove.co.uk/properties/107741702#/?channel=RES_BUY

I would buy as central as you can. For the first time in decades people are choosing remote areas over London because of Covid and wfh. I would take advantage of the rare lull in the market. London prices will rise again and you'll have an asset with increased equity even if some of it is mortgaged.

I still think it would be better to have a large MG than renting.If you are in Central London ,then your property would most likely go up rather than down (although nothing is guaranteed obv) If you got a low interest rate to start with say a year or two .Then you may be able to sell the Rental once the Cladding is sorted out .

It's not that big a mortgage. A cousin of mine has bought on an interest only mortgage - it's a gamble though. Their last place doubled in value in 10 years or less and so they have remortgaged due to better jobs and bought somewhere bigger.
They will sell and downsize in say 10 years time. If the housing market is static or increases they are doing well. If it falls they are screwed

Don't buy it in one name and try and get round SDLT that way.

We bought in my husbands name (I was a FTB, and wanted the first time mortgage options still available in case I wanted to invest in a BTL).

When we remortgaged later, we added me on as a joint owner, and had to put stamp duty then, so if you ever want to legally own the property jointly - except via marriage rights - it'll trip you up eventually.

Would echo the posters saying buy a smaller property though. You may not get your home office in a 1 bed, but you won't have to work til you drop either. Life's for living!

@Rollercoaster1920

How do your parents feel about your inheritance flowing to the Philippines? Whilst you don't have children and it shouldn't matter I do think you need to protect yourself in case of death and divorce.

We are not married, and the intention was to buy it in my name only for the time being (since my family is putting in all the deposit & stamp duty). Then we will then share on mortgage payments proportional to salary. Or maybe it makes more sense to get a joint mortgage though this introduces complications to deal with the deposit.

@snoktruix are you wedded to South London? A quick search on right move shows houses (so no service or lease charges) in parts of east London for £400-£500k. With cross rail due soon, that would make commuting pretty fast.

I usually say avoid taking out a big mortgage later in life but in your situation I would go for it. And buy it in an area you want to live in. You are paying an obscene amount of rent each month. Take out the mortgage making sure you fix for 5 years. Then put extra into your pension and anything else towards overpaying the mortgage.
Hopefully your Buy To Let property will be sorted so that later on you could sell that and even sell the new London property and move somewhere cheaper so the mortgage is paid off earlier

If you're not married, there's not a chance I'd put it solely in your partners name. Not a chance.

Move to Birmingham, get a house for £300k. Everywhere is desperate for nurses and you could easily get a remote/ local job. Retire earlier and have much less stress