We’re planning to return to the UK from Australia and wonder whether we can get a mortgage
Q We are a couple both aged 76 who are currently living in Australia. However, we would like to return to the UK to be with family as we no longer have any relatives in Australia. My husband is English and I am British. Unfortunately we have very limited finances but get an Australian pension with a UK top-up.
We would like to buy a new-build house near to where my daughter lives in Sevenoaks in Kent. We have looked into the help-to-buy and home for life schemes and wondered if you think either might help us and whether we would be able to get a mortgage at our age.
A You might be surprised to hear that several building societies in the UK no longer impose an age limit on their mortgage borrowers and there is one which puts the age you can be at the end of the mortgage term at 95. Most other lenders put this age at 80 so you would struggle to get a mortgage from them. But even if your age doesn’t form a barrier to getting a mainstream mortgage, the fact that you don’t have a recent UK credit history could well stand in your way. However, this may not be such an issue with lenders who offer lifetime mortgages – a form of equity release – which are increasingly being used by older borrowers who want to buy a new property to be closer to family and friends. Because the interest on a lifetime mortgage can be rolled up and added to the original loan – although it doesn’t have to be – there’s a much lower risk of default so whether you are a model borrower or not doesn’t matter so much.
As far as the help-to-buy scheme goes, it’s only an option if you have enough cash to put down a deposit of 5% of the purchase of your new home and you can get a mainstream mortgage of 75% of the value of the property (which as has been already said, could prove tricky). In the eyes of several industry commentators, the various home for life – or lifetime lease – schemes are a serious no-no largely because, unlike lifetime mortgages (which are regulated by the Financial Conduct Authority), they are unregulated which means that if you are given bad advice, you have no means of redress. Lifetime leases are aimed at people who want to move but cannot – or don’t want to – pay full price for a property. You pay a lifetime lease firm a discounted price but the money you hand over simply buys you the right to live in the property for your lifetime or lifetimes if there are two of you. The actual owner is the lifetime lease firm which gets the property on your death unless you have taken steps to ensure that up to 50% of the future value of it can be passed on as an inheritance.