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robster

Mortgage If You're Over 40?

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We're discussing buying at the moment (see buying in Salisbury) and one of the things my hsuband says in favour of it is that he'll find it hard to get a mortgage in a few years as he's just turned 40.

Excuse my ignorance, but is this really true??

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The answer is that you can get a mortgage when you are 40 and over. The mortgage lenders would not want to cut off all the business they can get from these people. However, once you are 40 and over you will probably have to arrange a mortgage that runs for less than 25 years.

See a thread I started recently:

http://www.housepricecrash.co.uk/forum/ind...topic=25373&hl=

Edited by Alfie Moon

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I recently got a mortgage and because my partner is just over 40, it had to be a 24 year mortgage rather than 25 - each year from now on would reduce that. It did make quite a big difference to my calculations as it put up the monthly payment fairly significantly and I feel like another year or two of that might put the monthly payments out of reach. Of course the decision also depends on your honest belief about prices in your area as falling prices might outweigh this effect - as a Londoner I'm not expecting big falls around me, although elsewhere I might have made a different decision.

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This is an important consideration for today's FTB's. If you are buying aged 34 then by the time you've built up enough equity to move up the ladder your age is going to make it very difficult to move.

PS. Why is this in the your area thread?

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If you have 25% equity, then you can do whatever you want. If your mortgage is Interest Only then how do monthly payments increase if mortgage term is shorter ?

Neil

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If you have 25% equity, then you can do whatever you want. If your mortgage is Interest Only then how do monthly payments increase if mortgage term is shorter ?

Neil

Yes but interest-only is (for most) a pretty stupid option as it is equivalent to renting off the bank. And even assuming that you are going to try and invest to save the capital sum elsewhere, you will have a declining amount of time to do that in as you grow older. Most people would wish to own their house by retirement age rather than rent it from a financial institution.

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Well you're 'renting' but keeping all the capital appreciation over 20+ years (oh sorry, forgot what forum I'm in - prices will have crashed by then...)

Seriously, an approach I think will be used by more and more people, voluntarily or not, is to downsize on reaching end of mortgage, therefore clearing mortgage which should be a small % of equity by then. Benefit is having lots more cash every month that you're not spending on Repayment. If you make money through business, investment etc.. then you can clear it that way in 20+ years

Neil

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Well you're 'renting' but keeping all the capital appreciation over 20+ years (oh sorry, forgot what forum I'm in - prices will have crashed by then...)

Seriously, an approach I think will be used by more and more people, voluntarily or not, is to downsize on reaching end of mortgage, therefore clearing mortgage which should be a small % of equity by then. Benefit is having lots more cash every month that you're not spending on Repayment. If you make money through business, investment etc.. then you can clear it that way in 20+ years

Neil

Yes, well I tend to think it's a bit of a delusional approach. It's come to seem normal to twenty-somethings, but it's a very strage kind of mortgage really. Just look at all the problems with endowments and there it's just a shortfall. You can downsize if you're lucky, and there is likely to be some capital appreciation, but unless you have a decent chunk of money from elsewhere you are going to have a massive bill to settle just when you don't need it. Also you are going to be in adifficult position for moving up and on in the meantime as you will not be putting any equity into the property. I can see that there might be some appreciation, but to say that the mortgage will be a small % of equity seems absurdly optimistic.

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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