Mortgages into Retirement

Posted on 10 May 2010 by Val Aviss


I own my own flat in Glasgow with no mortgage worth about 165k.

My sister and I have inherited my late mother's house, a small terraced house in Weymouth, and I am considering buying my sister out of her share so will need to raise between 70 and 80k. I have been told it will be better to do this by remortgaging/capital raising ( whatever the correct term is ) on my own home rather than seeking a buy to let mortgage for 50 percent of it's value on the other property. As I am nearing retirement age will there be any restrictions on the term I can get?

This will either mean that your monthly repayments will be quite high, if you take a capital repayment mortgage, or that you will have to have some way of repaying the whole debt at the end of the term if you take an interest only mortgage.  Whilst you are still earning you may wish to repay as much of the mortgage as you can by opting for the capital repayment method with the option to switch to interest only and lower monthly payments later.  However you decide, all Lenders and mortgage advisers are under a duty of care to make sure that you can afford a mortgage throughout it's term and they will want to be sure that you will have sufficient income to support the mortgage payments once you retire.

Whether or not you take out a normal residential mortgage by remortgaging your existing home or you take out a Buy to Let mortgage on the property in Weymouth needs careful consideration. It may be simpler to take a residential mortgage, but this is not necessarily the best option and I recommend that you seek both independent tax and mortgage advice before reaching a final decision.

Peter

As you are nearing retirement age there are going to be restrictions on how long you can borrow the money for. Typically you can expect to be able to take the mortgage up to your 75th birthday at which point the loan would have to be repaid.

Answers provided in response to Ask the experts are based on the information provided and do not constitute advice under the Financial Services & Markets Act. They reflect the personal views of the authors and do not necessarily represent the views, positions, strategies or opinions of John Charcol. All comments are made in good faith, and John Charcol will not accept liability for them.

We recommend you seek professional advice with regard to any of these topics where appropriate.

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