My heart regularly sinks when I read the finance news headlines as I envisage mortgage hopefuls getting excited about the latest offerings.
Unfortunately as with most news stories the devil is in the detail and all too often things are not what they seem.
Today’s heart sinking headline is:-
NATIONWIDE LAUNCHES MORTGAGE FOR UP TO 85 YEAR OLDS
Sadly the key phrase comes in the sub paragraph:-
“Nationwide’s move will mean a 60-year old can take out a 25-year mortgage, provided they could show how they’d afford the repayments.”
*** PROVIDED THEY COULD SHOW HOW THEY’D AFFORD THE REPAYMENTS ***
There are already many lenders in this space and a couple that have no upper age limit at all!
However proving your income beyond retirement and that you’re in a job that you’re capable of doing into retirement, to the satisfaction of the lender, is often the issue.
A builder for example might have difficulty justifying being able to work till 85 and a state pension isn’t going to prove affordability on a £200,000 mortgage.
In the same publication there’s another headline about the massive rise in ‘fee free mortgages’. While this is also true the fact is that the mortgage interest rate will invariably be higher to compensate. On a high value mortgage a lower rate and higher fee can mean big savings. As such it’s important to work out the total cost of your mortgage. We provide all our customers with comparable costs of not just fees and rates but the total cost of the mortgage and customers are often surprised at the results.
Other misleading headlines of late include:-
Return of 100% mortgages – the announcement from Barclays/Woolwich a few months ago seemed like a flash back to the cause of the credit crunch but again all wasn’t as it appeared. A guarantor such as a parent needed to keep the 10% deposit in a Barclays savings account for several years. Now while that’s a good idea it’s not exactly the much hailed 100% mortgage is it?!
In another example a lender launched ‘self-cert’ mortgages. What became known as ‘liar loans’ were effectively banned by the Financial Conduct Authority (FCA) again after the credit crunch so it was surprising to see their return. However this turned out to be an overseas company that launched online only and the FCA gave dire warnings about using them as they avoided any UK regulatory policies.
While it’s good to keep abreast of market changes and product innovation do always seek advice from a suitably qualified professional before building your hopes up. That being said I regularly speak to people who have been told that they can’t do something only for us to be able to find a way. We specialise in complex and problem cases so do get in touch to see if we can help.