How are you going to repay the mortgage?
Here is a story that you may be familiar with. We certainly are at Bricks and Mortar.
Clients of a certain age (50+) and who back in the day were sold an interest only mortgage on the back of some insurance backed product............... The product is not going to repay the mortgage in full and it's time for the client to contemplate how they are going to pay off the mortgage. The problem that many of us face is that we cannot extend the mortgage as we have no ability to borrow after we retire!
But wait I hear you cry, lenders will lend to you up to 80/85! The caveat however is that you need to ensure that you can afford the mortgage not at the moment but when you are drawing that pension. THE MORTGE NEEDS TO BE AFFORDABLE DURING YOUR RETIREMENT! So unless you have one of those final salary pensions (hen's teeth) or have been squirrelling your money away as your parents told you to do investing in a pension (did you listen?) then you could face a scenario where the bank are starting to ask some awkward questions about how you are going to repay the mortgage.
Down size is sometimes the only option but it does not have to be that way. Some of the lenders are starting to look at retirement lending but again the issue of affordabilty into retirement is still there. And what if you want to leave something for the kids other than the family home and a whopping great mortage? How do you get the lenders to extend the term and repay the mortgage but only look at your current income?
Nearly all of the lenders at the moment will allow you to borrow up till you are 70 and use your current income. I have come across three lenders that will look at a longer time frame and allow you to borrow up to 75 and 80 years old respectively. That may just give you the breathing space to allow you to organise your finances to achieve your goal.
Platform Funding - part of the Co-op and Santander will lend based on your ability to work until you are 75. So if you carry bricks for a living or perform open heart surgery then this ain't for you. If however you can demonstrate to the lender that you could work until your are 75 then they'll have a look at you.
Newcastle Building Society is the other lender that falls into this group of lenders and they'll lend till you are 80 based upon your current income. Not a pleasant thought I grant you but it gives you options.
So if you find yourself in a bit of a pickle regarding your mortgage and would like to see if we can help you then please do not hesistate to get in touch using the usual devices.....................................................