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anonguest

A First Time Mortgage At 50

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A very long time friend (from my schooldays!) has spent the bulk of his post-school years living and working overseas - where his wages (and cost of living) have been very low compared with Western standards. Thus his total accumulated wealth (money and assets) he can show for his efforts at near 50 years of age would be considered very low - about £30,000 in total.

He always planned/expected to return to the UK at some point (he even made some voluntary NI contributions over the years whilst outside the UK) BUT became increasingly wary (indeed - despondent!) at watching insanely escalating property prices back in Blighty. That said he assumed, till very recently, that provided he did not leave things too late and got himself a respectable paying job he could still manage to buy a modest place to live in at least some of the various UK locations he has in mind.

However, recently bringing himself fully up to date with the latest developments and un-affordability of UK housing has left him shell shocked! He now realises that he will have to resort to some additional 'compromise' measures to buy a place within in his budget range. One such measure, for example, is to choose a relatively short leasehold property for sale (i.e less than 70, but more than 40, years remaining). Being single, with no dependents, it wont be an issue for him as the place will more than likely his only and last home.

Even with price savings/reductions obtained by resorting to such compromises he faces the issue, first and foremost, of getting a mortgage.

I naturally, based on the accepted wisdom that most here would likely automatically quote too, told him that, at age 50, he could find himself being completely barred from obtaining a mortgage. His retort/assumption is that IF he confines himself to a purchase of no more than about £70K then with his savings (amounting to close to 50% of the price) he should surely still have a reasonable chance?? On top of this, he informs me, is that he HAS a UK job lined up paying approx. £40K (before tax) and will be starting shortly - an admittedly respectable salary relative to the proposed purchase price.

With these facts in mind.....was I mistaken to pour doom and gloom on him? Do I correct myself and tell him that actually he hasn't completely missed the boat to buy a home? Or will the high deposit factor be negated by the relatively short lease and/or personal age issue?

Edited by anonguest

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Not entirely unlike my situation. Live somewhere reasonably priced - not southeast England. Work, save, invest, grow his pot.

When I joined HPC, I was in a somewhat-similar situation, just a little younger than he is now. Today I'm a little older than him, but have built a house-and-pension pot of over half a million, in addition to the income portfolio that pays the rent. It works 'cos non-London rents have become amazingly modest.

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I think the age issue might not be that bad.

Regrettably, it is the (good) idea of buying a short leasehold property with less than 70 years left to run. I understand that the council of mortgage lenders seriously advise against giving a mortgage for leaseholds with less than 70 years remaining.

Perhaps he should consider a leasehold with an even shorter lease, say 30 years or so? Totally unmortgagable but the asking price should be so low he could perhaps be a cash buyer. There are (I regret to say) plenty of 'horror' stories about lessees not even realising they have a short lease until its far too late.

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A very long time friend (from my schooldays!) has spent the bulk of his post-school years living and working overseas - where his wages (and cost of living) have been very low compared with Western standards. Thus his total accumulated wealth (money and assets) he can show for his efforts at near 50 years of age would be considered very low - about £30,000 in total.

He always planned/expected to return to the UK at some point (he even made some voluntary NI contributions over the years whilst outside the UK) BUT became increasingly wary (indeed - despondent!) at watching insanely escalating property prices back in Blighty. That said he assumed, till very recently, that provided he did not leave things too late and got himself a respectable paying job he could still manage to buy a modest place to live in at least some of the various UK locations he has in mind.

However, recently bringing himself fully up to date with the latest developments and un-affordability of UK housing has left him shell shocked! He now realises that he will have to resort to some additional 'compromise' measures to buy a place within in his budget range. One such measure, for example, is to choose a relatively short leasehold property for sale (i.e less than 70, but more than 40, years remaining). Being single, with no dependents, it wont be an issue for him as the place will more than likely his only and last home.

Even with price savings/reductions obtained by resorting to such compromises he faces the issue, first and foremost, of getting a mortgage.

I naturally, based on the accepted wisdom that most here would likely automatically quote too, told him that, at age 50, he could find himself being completely barred from obtaining a mortgage. His retort/assumption is that IF he confines himself to a purchase of no more than about £70K then with his savings (amounting to close to 50% of the price) he should surely still have a reasonable chance?? On top of this, he informs me, is that he HAS a UK job lined up paying approx. £40K (before tax) and will be starting shortly - an admittedly respectable salary relative to the proposed purchase price.

With these facts in mind.....was I mistaken to pour doom and gloom on him? Do I correct myself and tell him that actually he hasn't completely missed the boat to buy a home? Or will the high deposit factor be negated by the relatively short lease and/or personal age issue?

And you think this is low? What kind of world do you think people live in? There are plenty of people I know - 50 years+ who have nowhere near this amount of money. I can only conclude you are a Tory MP with no idea of what is going on. *****.

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Sorry but in my view if your total wealth including pension at 50 is 30k then you've made some unfortunate monetary decisions in life, 15 years from retirement age. of course there are loads of people like that but that doesn't mean they are the norm either.

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With so many people priced out and people not being able to afford to buy until they are older I would imagine mortgages at 50 becoming more and more prevelant..

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Having had a number of failed tech startups in my thirties I went into my 40s with 5k debt and no house. Since then I have lived in London and as a contractor or now perm have earned over 80k personally but over 5 of those years supported my wife through university and a year ago she began working on 30k. We live pretty frugally. Many years we had no holiday and last couple years we went camping. We shop at lidl. We don't go out very often. No particularly expensive hobbies apart from two kids. Even on 80k + living in London I would have to put some on the cards every month in the last 3 years. Rent here is 1850 and this is not high. If we move we would be forced to pay over 2k. I now find myself at 47 with 35k credit card debt which now the wife is working we only just do a bit better than break even. When people talk of living on 40k and managing to squirrel some away I am amazed. When you have a young family and have to pay childcare and you are not getting your free bonus of untaxed wealth from a pwoperdy or top ups from the gov the ends don't really seem to meet. I focus heavily on clearing this debt but that is going to take 3 years at this rate. Luckily I manage to keep it under control because I have a clean credit rating and keep getting 3.5% balance transfer deals so am not drowning in interest on this debt but am acutely aware of my dependency on the low rates. tell your mate he's not doing too bad. however if he is going to buy now then he is toast.

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Partly depends on where his £40K job is. When I lived in London I was earning rather less than that and putting away more than a grand a month. But that was living extremely cheaply - and prices of even a room in a shared house have only gone up since. Still if he has local knowledge he might also get a great deal.

There are plenty of places in the UK where you can pick up houses still fairly cheaply. A village near me here in North Wales regularly has 2-3BR houses for £60-70K - and they are not ex-council either and frankly it's quite a nice village too. It is, however, something of an employment blackspot outside of tourist season though, and even more so if you are not local by birth. Weather wise, being on the edge of the mountains it can also be a bit bleak.

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And you think this is low? What kind of world do you think people live in? There are plenty of people I know - 50 years+ who have nowhere near this amount of money. I can only conclude you are a Tory MP with no idea of what is going on. *****.

I agree with what you say. What I meant was that this sum represented his total worldly wealth - and that he had no other assets (house, car, etc).

The (sad) fact that what you say is true does not change the fact that this sum is still not that much when stacked against the cost of living here in the UK - and would not last very long if relied upon to provide housing, transport, retirement income, etc.

In some respects I greatly admire/envy the chap for having lived the last 25 or so years enjoying himself with far less regard to material/wealth acquisition than we (sadly) are indoctrinated into pursuing here - leading us to the bland suburban middle class home and 9 to 5 job lifestyle.

Edited by anonguest

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In some respects I greatly admire/envy the chap for having lived the last 25 or so years enjoying himself with far less regard to material/wealth acquisition than we (sadly) are indoctrinated into pursuing here - leading us to the bland suburban middle class home and 9 to 5 job lifestyle.

I see you said above that he always planned to come back to Blighty. Could he stay abroad if he wanted though? Or is (was?) his job and lifestyle out there one that is difficult to pursue after a certain age?

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I see you said above that he always planned to come back to Blighty. Could he stay abroad if he wanted though? Or is (was?) his job and lifestyle out there one that is difficult to pursue after a certain age?

It's complex (and unrelated to the underlying question of this thread re: getting a mortgage at 50-ish). I guess he could, in theory, stay overseas but always maintained links with the UK (family and friends) and remains unmarried - so longer term loneliness in older age could well be one factor that focuses the mind sufficiently to making the decision to finally return home and put down final resting place roots.

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It's complex (and unrelated to the underlying question of this thread re: getting a mortgage at 50-ish). I guess he could, in theory, stay overseas but always maintained links with the UK (family and friends) and remains unmarried - so longer term loneliness in older age could well be one factor that focuses the mind sufficiently to making the decision to finally return home and put down final resting place roots.

it is indeed hard to fight the lure of the Brits' free health and social care birthright, even after 25 years absent and minimal contribution

Edited by pipllman

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In some respects I greatly admire/envy the chap for having lived the last 25 or so years enjoying himself with far less regard to material/wealth acquisition than we (sadly) are indoctrinated into pursuing here - leading us to the bland suburban middle class home and 9 to 5 job lifestyle.

I see you said above that he always planned to come back to Blighty. Could he stay abroad if he wanted though? Or is (was?) his job and lifestyle out there one that is difficult to pursue after a certain age?

It's complex (and unrelated to the underlying question of this thread re: getting a mortgage at 50-ish).

I think the relation to the underlying question is how different paths in working life and consumption patterns compare with regarding to saving and preparing for retirement.

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Sorry but in my view if your total wealth including pension at 50 is 30k then you've made some unfortunate monetary decisions in life, 15 years from retirement age. of course there are loads of people like that but that doesn't mean they are the norm either.

Well 17 years to go (67 subject to moving goal posts).

No point in wealth accumulation either, no national insurance contributions and a minimum income guarantee of £155 waiting at 67 worth about £250,000 as an open market purchase option. And you wonder why all ex-pats return here, plus free health benefits and in some cases rent.

I'm in the opposite postion, aged 51, nearly 36 years contributions, and will definitley never get any welfare top ups due to savings even if I gave up work now. The less you pay in the more you draw.

Edited by crashmonitor

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I think the relation to the underlying question is how different paths in working life and consumption patterns compare with regarding to saving and preparing for retirement.

Not really. That would be an entirely separate thread/topic. The issue/question posed was IF this chap will find himself struggling to get a mortgage/afford a first time home to buy at his age, and with his described circumstances.

He could very likely continue to live, modestly and comfortably, in his third world settings if he chose to. The issue is not access to 'free' health care, etc. Also, as alluded to, he did make more than minimal contributions into the UK social security system over the years. As far as I am concerned he's paid his fair share for the mimimal amounts he's likely to take out of the system. But, again, that's a separate debate for a separate thread.

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Not really. That would be an entirely separate thread/topic. The issue/question posed was IF this chap will find himself struggling to get a mortgage/afford a first time home to buy at his age, and with his described circumstances.

He could very likely continue to live, modestly and comfortably, in his third world settings if he chose to. The issue is not access to 'free' health care, etc. Also, as alluded to, he did make more than minimal contributions into the UK social security system over the years. As far as I am concerned he's paid his fair share for the mimimal amounts he's likely to take out of the system. But, again, that's a separate debate for a separate thread.

No let's debate it, do you seriously believe that 11 years in school, may be further education too and may be 20 years of minimum income guarantee, free rent and health care is coverable in his remaining 17 years in work.

I'm puzzled how this stuff gets covered with a normal 40 year employment history let alone 17. Of course it doesn't and we have a two trillion debt. Just hope the whole life Ponzi scheme sees me out, I don't believe in the magic money tree.

Edited by crashmonitor

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In some respects I greatly admire/envy the chap for having lived the last 25 or so years enjoying himself with far less regard to material/wealth acquisition than we (sadly) are indoctrinated into pursuing here - leading us to the bland suburban middle class home and 9 to 5 job lifestyle.

This was the bit I was commenting on. You could have made this comment on an entirely different thread, but you made it here.

I wasn't implying anything about the contributions he made here or elsewhere. I just thought it was interesting. People often say: "Nobody on his deathbed wish he'd earned more money when he was young." Fine, but maybe someone aged 50 or 60 has several decades before that. Maybe these people wish they'd earned more. If his alternative isn't relevant, why even mention it? You could just have said: "My mate has 30k aged 50 and I told him he's struggling if he wants to buy. What should I have said? Discuss."

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This was the bit I was commenting on. You could have made this comment on an entirely different thread, but you made it here.

I wasn't implying anything about the contributions he made here or elsewhere. I just thought it was interesting. People often say: "Nobody on his deathbed wish he'd earned more money when he was young." Fine, but maybe someone aged 50 or 60 has several decades before that. Maybe these people wish they'd earned more. If his alternative isn't relevant, why even mention it? You could just have said: "My mate has 30k aged 50 and I told him he's struggling if he wants to buy. What should I have said? Discuss."

I could indeed have done so. Except that it would inevitably resulted in many replies querying why does he only have 30K at age 50, etc etc. So I pre-empted that by providing a small amount of additional background/context. Clearly that made my initial post needlessly long winded for you - costing you an extra 25 seconds of reading time. But I thank you all the same for overcoming your aversion to such irritating time wasting and contributing to the thread - even though the time you spent typing replies fail to contribute an answer to the question posed!

Edited by anonguest

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You already knew the answer to the question you posed! You mentioned some partial details which I thought facilitated an interesting discussion.

You said you admire/envy him. I think the tradeoff is interesting.

No let's debate it, do you seriously believe that 11 years in school, may be further education too and may be 20 years of minimum income guarantee, free rent and health care is coverable in his remaining 17 years in work.

I'm puzzled how this stuff gets covered with a normal 40 year employment history let alone 17. Of course it doesn't and we have a two trillion debt. Just hope the whole life Ponzi scheme sees me out, I don't believe in the magic money tree.

I think it is conceivable that working beyond normal retirement age will become widespread and then the situation won't be quite so bad.

On the other hand when you consider the amount of paid employment which is "make-work" maybe we can have 20 years in education, 20 years in work and 40+ in retirement. Maybe in a non-trivial number of cases there is less cost and harm if less work is done.

Maybe I'm pushing this line of reasoning too far.

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it is indeed hard to fight the lure of the Brits' free health and social care birthright, even after 25 years absent and minimal contribution

He earned a low income abroad and didn't consume any public services. Furthermore he made NI contributions.

If he had stayed here and earned a low income (it would be relevant if the OP mentioned his occupation - it might give an indication of what his income might have been in Blighty) he would have likely have consumed more public services than he contributed in tax.

Now he's earning a higher salary, how many years do think he'd need to work in order to cover the cost of his health and social care?

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Well, he is earning £40k


Which means he will be paying £5,880 tax and £3,832.80 NI = £9,712.80 per year




that is about 18% to healthcare and 15% to welfare (£1748.30 and £1456.92 respectively)


So, if he works 17 years, that will be a total contribution of £54,488.74 to health and welfare


It depends how much health and social care that buys compared to what he needs

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He always planned/expected to return to the UK at some point (he even made some voluntary NI contributions over the years whilst outside the UK)

No point in wealth accumulation either, no national insurance contributions and a minimum income guarantee of £155 waiting at 67 worth about £250,000 as an open market purchase option. And you wonder why all ex-pats return here, plus free health benefits and in some cases rent.

The new flat-rate pension doesn't work like that. You have to have a minimum of 10 years NIC to get anything at all. Your pension is worked out in qualifying years so if you have, say, 20 years contributions it's worked out as £4.428 x 20 = £88.56 or thereabouts. The maximum number of qualifying years is 35. I think they're doing a transitionary top-up or option to purchase further years but that might not be available by the time the OPers friend retires.

Edited by Solitaire

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I just got a small mortgage no problem at all - aged 58. Finally got fed up renting. Bought miles away from where I work - prices not so insane, caravan through the week and home at weekends.

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No let's debate it, do you seriously believe that 11 years in school, may be further education too and may be 20 years of minimum income guarantee, free rent and health care is coverable in his remaining 17 years in work.

I'm puzzled how this stuff gets covered with a normal 40 year employment history let alone 17. Of course it doesn't and we have a two trillion debt. Just hope the whole life Ponzi scheme sees me out, I don't believe in the magic money tree.

I didn't actually say what the chap earned before he left the UK, to live his 'down to Earth' lifestyle. It was significant!

That plus the additional paid voluntarily during the absence years means that he has paid as much as the average Joe who has been here all the time. Is that sufficient to calm your ire?

In any case, as already said, that is taking the thread off at a tangent to the basic question posed.

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