February 2023: This month our expert Neil Bishop of Mortgages for Business helps a divorcee to take out a shared ownership mortgage, explains how to find a broker and offers reassurance that age need not be a barrier for first-time buyers
First-time buyer at 54 – what are my mortgage options?Question
I’ve inherited a substantial amount of money – enough to put down a very generous deposit on a house.
The reason I need your advice is because I am – technically – a first-time buyer, even though I am 54. Therefore, I would like to find out more about whether I will be accepted for a mortgage based on my age. And, if so, whether there may be certain conditions or if I may need to seek a specialist mortgage.
I’m not sure if it’s relevant but I’ve inherited £120k so I am planning to put this all down as a deposit on a two or three bed property which I expect to cost around £300k. I earn £32,000 a year and have no debts and a good credit score. I’ve also been paying rent my entire adult life and have never missed a payment, plus my kids are grown up so I’ve no dependents.
Answer
Mortgage lenders will have no issue at all with you applying for a first-time mortgage at age 54. Most lenders can offer a mortgage up to your state retirement age of 67, and some specialist lenders can lend up to age 80.
For the loan size, a good guide to working out how much you could borrow is to look at lender income multiples.
Typically, a lender will allow you to borrow 4.5 times your total income (before tax). In this scenario, to receive an £180k loan on an annual income of £32,000, the income multiple would need to be 5.63.
Some specialist lenders in the market specifically deal with over-50’s, which can potentially lend up to six times your total income, so I’d recommend speaking to a whole of market mortgage broker who will be able to assess your suitability with this type of loan.
All lending figures are subject to a full affordability assessment.
Question
Two years I ago I went through a divorce and my ex-husband and I split the proceeds of our house 50/50. I received £80,000 (or thereabouts) which I’ve put into savings. As you can probably imagine, I’ve not received a huge amount of interest so I have the same amount, plus a tiny bit more, sitting in my account.
I am considering buying a property on my own now but because house prices in my area (West London) are so expensive I think I can only afford to buy alone if I go for a shared ownership scheme. However, am I allowed to use the scheme if I am not, technically, a first-time buyer? Thanks for your advice?
Answer
The government’s Shared Ownership scheme is a great option to make a property purchase more affordable, and we have seen lots of our clients purchase their properties using this method.
The good news is that, yes, you can use the scheme regardless of whether you are not a first-time buyer or not.
There are other criteria you must meet, as well as a list of general eligibility criteria. For further information, visit the government website here.
If you do meet the criteria for a shared-ownership mortgage, a whole of market mortgage broker will then be able to help you secure the most suitable mortgage for your circumstances.
Question
I am remortgaging this year – my deal is up in June – and I am starting to look around for deals as I believe I can line up the remortgage six months in advance.
The rates seem to much higher now than they were when I took out my current deal, which is a two-year fixed rate with Santander. I’m just after some general advice on whether five-year or two-year fixes are better value in the current environment.
Also, is it a good idea to fix my rate now – ie five months before I’m due to remortgage? Or should I wait and see if rates fall?
Answer
It’s great to hear that you’re looking to fix onto a new product as soon as possible, as sorting this now will mean you have a new deal ready for when your current rate expires, preventing you from falling onto your lender’s SVR (Standard Variable Rate). The good news is that most lenders we speak to are now allowing their clients to change their chosen rate up to a month before it’s due to go live if there is a better deal available to them, so hopefully, this will help you in your decision.
In terms of pricing, on the whole, five-year fixed rates are currently lower than the two-year fixed deals, but the best advice I can give is to speak with a broker who can assess your full circumstances to see which deal will suit you best over the next few years. Best of luck!
Question
I am a first-time buyer looking for some help to take out a mortgage. I am not quite there yet as I am waiting to see what happens with mortgage rates and house prices this year. However, I am keen to start researching the various mortgage options available.
The advice so far seems to suggest that I should speak to a mortgage broker to take out a mortgage. But there seem to be so many and I wondered how most people go about choosing one. Do they go local and find someone in their high street or is it best to find a specialist broker to suit my needs – ie a first-time buyer?
Also, can they help me find a conveyancer and can they offer other financial advice? For example, I am not sure whether to pile all my savings into the deposit or leave some in savings. Thanks so much!
Answer
There are many different ways to find a mortgage broker, and I can’t stress enough how helpful they can be in sourcing you the best rate.
You could find your broker through a family member, they could be referred by an estate agent who has an in-branch mortgage adviser, or perhaps they use a local company who they refer business to. Or you could just simply find one online!
You also have the option to approach your bank and request to speak with one of their own mortgage advisers.
In any of these scenarios, my advice would be to do your research on your chosen broker before getting started. Lots of brokers will have Trustpilot or similar reviews, which will show what previous clients thought of the service offered.
I would also lean towards a whole-of-market mortgage broker, as they can access rates from both high street and specialist lenders, rather than a broker who works from a restricted panel.
If you do choose to speak with your bank, or any high street bank, they will only be able to advise on their own products and will not be able to compare against other lenders, so do bear this in mind.
Financial advice is different from mortgage advice, but on your specific query above around how to best sort your money, your bank should be able to offer you simple advice on interest rates for saving accounts which you can use to determine the best place for your money. Good luck!
As part of the residential desk at Mortgages for Business, Neil can offer advice on an extensive range of scenarios – from those looking to purchase their first home, to those with complex income streams looking to move or remortgage.
Before joining Mortgages for Business in 2022, he managed a team of five brokers at a new build specialist, sourcing finance for home buyers. He’s also the proud owner of a Green Blue Peter Badge!
Email kate.saines@emap.com to ask him a question
