mayhemuk

How old is he? I didn't see?

Giantaxe

How is this legal? One can plausibly have a high enough income in retirement through interest/capital gains/pensions to qualify otherwise.

not2old

as always discriminate against old people on state pensions.

I suppose even if we were to have a 40% LTV the lenders would still hike the rates over those of working age up to their neck in debt that would likely default on the mortgages?

I want to know if a senior OAP state pension income only with any added Guaranteed credit (single or couple) could get a preferred rate on a 50% LTV on the basis its a 100k mortgage?

And don't start telling me to look for something cheaper or downsize, shared ownership or equity release....

Editha

The general rule is that you must be under 75 when the mortgage ends.

In Canada, and I guess the USA too, there is a difference between the term of the mortgage and the amortization period. In the UK they are the same. So, if you get a 25 year mortgage, that implies it will be paid off in 25 years.

So, you are not going to get a 25 year mortgage if you are over 50.

not2old

lets see if mayhemuk can figure this one out for us old folks

Editha

Putting myself in Not2old's shoes, wanting an £100,00 mortgage, 50% ltv these are the obstacles I'd expect to encounter. I assume Not2old is applying at the age 65.

Firstly, no lender will be prepared to offer me a mortgage for more than 10 years.

Secondly, no lender will offer me an interest free mortgage. These are hard to come by nowadays, and unlikely to be available to someone in my circumstances.

Thirdly, the lender will only take into account my retirement income, in other words they will disregard any earnings.

Fourthly, if I only have income up to pension credit level to make the repayments from, the answer from any responsible lender is going to be no. Pension credit is regarded as the minimum to live on. A responsible lender is not going to allow you to take on debt.

Giantaxe

As I said, how is this even legal? Over 75's are quite capable of having an income capable of repaying a mortgage and - as not2old alludes to - that income may be more stable than someone of working age.

Editha

To which the answer is yes it is legal. Why do you think it might not be?

Editha

Sorry, I shouldn't be flippant. This is not a question of discrimination. Not2old wants a mortgage while claiming pension credit. As I stated before, only an irresponsible lender would lend to someone with barely enough income to cover their outgoings.

As for better off pensioners, it is still not unreasonable to want the mortgage paid off by the age of 75. Over that age, the risk that the pensioner will hop the twig before the mortgage term has ended is just too great.

Giantaxe

Why is that relevant? The mortgage is secured by the property and if the borrower is deceased - just as would be the case with someone passing away at any age - the lender has claim to the property in order to retrieve that debt.

Editha

'Reclaiming the property' can be an expensive process for the lender. The property can't be sold until probate has been obtained, which means locating the heirs. Mortgagees may demand life insurance from a younger person, but an older person is unlikely to be offered a policy. Once a property is put on the market it may take months or years to sell. No lender wants that situation if they can avoid it.

Giantaxe

And until such time as the property is sold, the mortgage is in effect, meaning the estate is liable for repaying the mortgage. So, again, I don't see an issue here. Either the heirs pay the mortgage out of the estate until it is sold, or those costs get added to the mortgage holders claim on the property, just as would be the case if the mortgagee defaulted. Throw in the fact that those who have qualified with pension income are less likely to see it disappear under their feet (they are not going to lose their "job") and it really looks like a dubious policy.

As to being required to take out life insurance as a condition of a mortgage, all I can say is "wow".

Editha

I think I'm out of date on life insurance. Back in the days of yore when I was a mere slip of a girl, it used to be a standard condition of taking out a mortgage that you took out life insurance, but that is pre easy-credit, and despite the financial crisis, I don't think the lenders are doing that now.

As for the rest, I think you are underestimating the legal costs and complications that can arise following a death, which are largely unpredictable.

not2old

what I gather from the way UK mortgages are dished out, they are basically for young folks & not for those over 50.

What 'gets my goat' based on that comment 'age 75' or over 50 & you want a mortgage - then forget it ... is why?

Is there such a product in the UK as a 'HELOC' (line of credit secured by the house) similar to what they have in the US & Canada?

A HELOC is similar to an interest only mortgage, however from what I've read on the UK mortgage from lenders is that an 'interest only' mortgage is only available to those with high incomes, likely working.

Editha

I think it is worth noting at this point, that the world financial crisis was triggered by 'subprime' mortgages in the USA, and elsewhere. Personally, I hope very much that banks continue to be careful about whom they lend to and how much.

You said not to mention equity release, but that is available for older people, so it isn't as if it is impossible to cash in on the value of your home.