Author Topic: Mortgage terms ?  (Read 1039 times)

Mortgage terms ?
« on: August 09, 2019, 12:06:22 pm »
A quick & probably stupid question re mortgages.


I’m 55 in December. My employers retirement age is 65.


Does this mean that if I apply for a mortgage I’m going to be restricted to a 10 year term ?
Not fast & rarely furious

tweeting occasional in(s)anities as andrewxclark

caerau

  • SR x 3 - PBP fail but 1090 km - hey - not too bad
Re: Mortgage terms ?
« Reply #1 on: August 09, 2019, 12:21:51 pm »
Most likely yes, though I think there are products out there that can accommodate beyond that - but you'd need to provide evidence that you'll be getting income beyond retirement date.
It's a reverse Elvis thing.

caerau

  • SR x 3 - PBP fail but 1090 km - hey - not too bad
It's a reverse Elvis thing.

Tim Hall

  • I want to eat the fleeting shade of your lashes
Re: Mortgage terms ?
« Reply #3 on: August 09, 2019, 12:38:44 pm »
I wasn't when I got this mortgage last year. I was 57 then and it's an 18 year term I think.
There are two ways you can get exercise out of a bicycle: you can
"overhaul" it, or you can ride it.  (Jerome K Jerome)

S2L

Re: Mortgage terms ?
« Reply #4 on: August 09, 2019, 01:06:37 pm »
You can get a longer term, as long as the lender is convinced you have a plan... just don't go there and tell them that you will most definitively retire at 65.
I have just got a mortgage up to the age of 69... (I know the thought of it sucks, but hey ho!)

Martin

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Re: Mortgage terms ?
« Reply #5 on: August 09, 2019, 01:09:20 pm »
my mortgage doesn't mature until I'm 70; although I've paid off the substantial value of the house through another mortgage which matured a few years ago

Nationwide did flag this up when I took it out but basically allowed it.

Interestingly it will hurt financially but I can get a personal loan to pay it off in 3 years for only 0.25% APR more than the current mortgage rate of 2.75%, and it will be protected from the vagueries of the UK economy

sib

Re: Mortgage terms ?
« Reply #6 on: August 09, 2019, 01:15:00 pm »
Probably not
I thought employers didn't have 'retirement' ages anymore due to age discrimination legislation ?

FifeingEejit

  • Not Small
Re: Mortgage terms ?
« Reply #7 on: August 09, 2019, 01:27:03 pm »
Probably not
I thought employers didn't have 'retirement' ages anymore due to age discrimination legislation ?

They can't make you retire but their pension can have a "Normal pension age".
Defined benefit schemes use that to work out pension forecasts. e.g. If you retire at your NPA you'll get this much; if you work after that you won't get any more as your'e not allowed to; if you retire earlier work it out by subtracting infinity and dividing by 42 etc.

Re: Mortgage terms ?
« Reply #8 on: August 09, 2019, 03:34:34 pm »
Thanks for the info. Working out monthly repayments over a 10 year period is scary.   Won’t be doing anything this year. Will wait for the post Brexit crash in house prices.... though of course my little flat will be worth less...
Not fast & rarely furious

tweeting occasional in(s)anities as andrewxclark

caerau

  • SR x 3 - PBP fail but 1090 km - hey - not too bad
Re: Mortgage terms ?
« Reply #9 on: August 09, 2019, 05:57:07 pm »
Thanks for the info. Working out monthly repayments over a 10 year period is scary.   Won’t be doing anything this year. Will wait for the post Brexit crash in house prices.... though of course my little flat will be worth less...


Quite, I never understand why (most) people don't think about this.  My neighbours 2 doors down STILL haven't sold their house they moved out of in about 2011 because "they couldn't sell it".  What that means is that they weren't prepared to sell it for the current market price. I wonder if 8 years of mortgage payments on a nearly always empty house have improved their financial situation.  ::-)
If the market goes up, so does your house  value, but so does your purchase, if the market goes down, so does your house, but so does your purchase.
Negative equity aside (which of course is a major problem if you have it) the only real major stumbling block is Loan to Value in a plunging market.  The more strict lending terms since 2007/8 are a good thing frankly.


All that said, back in 2007 when I bought my current house, I (or rather my now wife and I) had already sold our houses and had a big fat wedge of cash to deposit.  Oh how do I wish we had rented for another six months... I knew the market was high at the time - didn't anticipate the magnitude of the plummet sadly. 
It's a reverse Elvis thing.

Re: Mortgage terms ?
« Reply #10 on: August 09, 2019, 06:12:40 pm »
All that said, back in 2007 when I bought my current house, I (or rather my now wife and I) had already sold our houses and had a big fat wedge of cash to deposit.  Oh how do I wish we had rented for another six months... I knew the market was high at the time - didn't anticipate the magnitude of the plummet sadly.
Hopefully you weren't as significantly affected as the money journalist who sold his house in 2004 and started renting because all the numbers said that a housing crash was on the cards. Or me, who managed to take a fixed rate 5 year mortgage at 5% about 6 months before the BoE cut rates to 0.5%.  Ooops.  :'(

S2L

Re: Mortgage terms ?
« Reply #11 on: August 09, 2019, 06:49:24 pm »
Thanks for the info. Working out monthly repayments over a 10 year period is scary.   Won’t be doing anything this year. Will wait for the post Brexit crash in house prices.... though of course my little flat will be worth less...

I just exchanged contracts today... it has only been possible because of uncertainty around Brexit... before we were always outbid, too many buyers on the market, people prepared to pay crazy money for some real turds.

I think it's a good time to buy

Re: Mortgage terms ?
« Reply #12 on: August 09, 2019, 10:24:51 pm »
All that said, back in 2007 when I bought my current house, I (or rather my now wife and I) had already sold our houses and had a big fat wedge of cash to deposit.  Oh how do I wish we had rented for another six months... I knew the market was high at the time - didn't anticipate the magnitude of the plummet sadly.
Hopefully you weren't as significantly affected as the money journalist who sold his house in 2004 and started renting because all the numbers said that a housing crash was on the cards. Or me, who managed to take a fixed rate 5 year mortgage at 5% about 6 months before the BoE cut rates to 0.5%.  Ooops.  :'(
I did similar. My brother is a major banker and told me that interest rates were likely to rise in the next few years, about 6 months before the recession!

S2L

Re: Mortgage terms ?
« Reply #13 on: August 10, 2019, 12:09:30 pm »
I took 5 years fixed at 1.9%... maybe I should have taken 10...  ::-)

ian

  • fatuously disingenuous
    • The Suburban Survival Guide
Re: Mortgage terms ?
« Reply #14 on: August 12, 2019, 11:09:28 am »
I think our rather good fixed rate ends about the time as interest rates are likely to go up. That said, the only reason we have a mortgage is the punishing early repayment fee (and the current deal only lets us pay off a maximum of 10% a year – we may need to hunt around for something more generous, I'm not sure there's any way to wriggle out of the ERP).

Thanks for the info. Working out monthly repayments over a 10 year period is scary.   Won’t be doing anything this year. Will wait for the post Brexit crash in house prices.... though of course my little flat will be worth less...

Quite, I never understand why (most) people don't think about this.  My neighbours 2 doors down STILL haven't sold their house they moved out of in about 2011 because "they couldn't sell it".  What that means is that they weren't prepared to sell it for the current market price. I wonder if 8 years of mortgage payments on a nearly always empty house have improved their financial situation.  ::-)
If the market goes up, so does your house  value, but so does your purchase, if the market goes down, so does your house, but so does your purchase.
Negative equity aside (which of course is a major problem if you have it) the only real major stumbling block is Loan to Value in a plunging market.  The more strict lending terms since 2007/8 are a good thing frankly.


All that said, back in 2007 when I bought my current house, I (or rather my now wife and I) had already sold our houses and had a big fat wedge of cash to deposit.  Oh how do I wish we had rented for another six months... I knew the market was high at the time - didn't anticipate the magnitude of the plummet sadly. 

No, people generally don't understand this, nor do they understand that things like stamp duty, estate agent commissions etc. are a percentage.

That and, of course, the belief that house prices will inexorably climb forever. And then they don't, it's just a blip to be waited out. Houses prices reflect affordability (the level of affordability and the number of buyers). Neither are infinite quantities.

That said, the same is true of stocks and shares, like most people, I have a pension based on the same theory of forever rises. Anyone of my generation who's received a pension statement recently will know how that's currently working out.
!nataS pihsroW

S2L

Re: Mortgage terms ?
« Reply #15 on: August 12, 2019, 11:13:05 am »
I think our rather good fixed rate ends about the time as interest rates are likely to go up. That said, the only reason we have a mortgage is the punishing early repayment fee (and the current deal only lets us pay off a maximum of 10% a year – we may need to hunt around for something more generous, I'm not sure there's any way to wriggle out of the ERP).


you have to work out whether the ERP exceeds the amount of interest you will pay by staying in the deal, which is unlikely. By the sound of it, your deal is similar to mine and our ERP is 5 grand, I seem to recall... it seems a lot of money, but it's peanuts compared to the interest we will pay over the years

Re: Mortgage terms ?
« Reply #16 on: August 12, 2019, 11:32:23 am »
For those approaching retirement age and with a near completed mortgage which goes beyond retirement may want to consider keeping a small sum on the go rather than paying the lot off, as it will assist their credit rating once they become 'economically inactive'.

Economic inactivity  People not in employment who have not been seeking work within the last 4 weeks and/or are unable to start work within the next 2 weeks.
 
Get a bicycle. You will never regret it, if you live- Mark Twain

ian

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    • The Suburban Survival Guide
Re: Mortgage terms ?
« Reply #17 on: August 12, 2019, 11:44:56 am »
We've been assiduous in overpaying the 10% for the past umpteen years, so the capital we owe is very small but we're looking at about 15 years of interest payments. To be honest, other than notionally liking the idea of being mortgage-free, our monthly payment is, by London standards, laughably small (I know people paying significantly more for a small room in a shared house than we pay for a four-bedroom detached house with two garages, a large garden, bears, and a yeti-habited summer house). Don't credit our financial acumen, it was pure luck, we bought a house in an ungentrified part of zone 2 London at the right time, and we've gradually slid out of the capital into bigger houses without increasing (and even decreasing) our mortgage debt.

Our current ERP is quite high, generally it seems the more flexible the overpayment terms, the higher the ERP. Understandable, considering the market is built on the longer-term yield of mortgage products.

I presume when my wife's family pop their collective clogs we get their houses (and I imagine the taxes), there's some legal blurb that my wife keeps waving under my nose and I keep ignoring. I don't imagine I'll be seeing my parent's house, as ever, that'll end up with my sister.
!nataS pihsroW

Re: Mortgage terms ?
« Reply #18 on: August 12, 2019, 12:54:58 pm »
I’m in the situation where I want to get out of my small flat.  I paid it off years ago but am getting fed up with 8 flights of stairs.  I like the estate but there are none of the larger ground floor places available.


Merseyside is a fairly low cost area & I’ve got a good wedge of cash for a deposit so I guess I’d better get looking.  I want to stop working in the next few years though & that probably doesn’t work well with having a big mortgage.
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tweeting occasional in(s)anities as andrewxclark

ian

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    • The Suburban Survival Guide
Re: Mortgage terms ?
« Reply #19 on: August 12, 2019, 01:08:26 pm »
If you have non-standard requirements, consult a mortgage broker, like insurance, mass-market products are based around default assumptions. Ultimately, all they care about is that you can keep paying for the entire term.
!nataS pihsroW

S2L

Re: Mortgage terms ?
« Reply #20 on: August 12, 2019, 01:09:26 pm »
Merseyside is a fairly low cost area & I’ve got a good wedge of cash for a deposit so I guess I’d better get looking.  I want to stop working in the next few years though & that probably doesn’t work well with having a big mortgage.

Get a boat...

Re: Mortgage terms ?
« Reply #21 on: August 12, 2019, 01:20:29 pm »
Yes, a broker is probably a good idea.  How do they work ? Do you pay them a fixed fee up front or do they get a commission from the mortgage co ?    The only broker I'm aware of is John Charcol who don't have a local office.
Not fast & rarely furious

tweeting occasional in(s)anities as andrewxclark

ian

  • fatuously disingenuous
    • The Suburban Survival Guide
Re: Mortgage terms ?
« Reply #22 on: August 12, 2019, 01:32:54 pm »
I think generally they get a commission/fee from the mortgage product providers, and like IFAs, they have to disclose them. But they have access to more specialised and flexible options that you get as an individual ticking checkboxes on a standard application form.
!nataS pihsroW

Re: Mortgage terms ?
« Reply #23 on: August 14, 2019, 05:33:40 pm »
Brokers can work on a commission basis or on a fee basis.  It used to be the case that the commission based people didn't have access to the whole market, because some lenders were stingy with (or didn't pay) commission, so the advice used to be to go to one with a fixed fee. IIRC, when we did it, the fee was around £500, so it wasn't significant in terms of the mortgage at that time. Often estate agents can point you at a trusted local broker or 2, so if you can't find a broker, it might be worth asking them...
Brokers should have access to software tools that can help filter the market and find smaller market participants that will specialise in niche products (though I don't know if your situation is that unusual).