Second home purchase mortgage for a 60-year-old using pension income

CONTACT MICHAEL

THE SCENARIO

A couple recently contacted me as they were looking to purchase a house together, although they had previously been turned down by multiple lenders. This client was 60 years old and already retired, so his income consisted purely of his pension, investments and 2 unencumbered buy to let properties which he also owned. His existing property was worth £450,000 and had an outstanding mortgage of just £1,000.

The key challenge I faced with this deal was he wanted to purchase and secure the new property with his partner, without selling his current home straight away. The brokers he tried previously had all turned him away due to a combination of his age and the nature of his income: the majority of high street lenders have a maximum age limit of 75 for a standard purchase and the pension income would not be enough to service the loan.

The broker he initially spoke to had suggested remortgaging the two buy to let properties, however, this would result in hefty early repayment charges that my client understandably wanted to avoid. This would mean whenever he did decide to sell his current property, it would cost him a lot and use the funds he would need to pay off the debt on his buy to lets.

Following this, I suggested remortgaging the buy to let properties but by selecting a bespoke product that would guarantee no early repayment charges. To do so, I contacted the specialist buy to let arm of a building society, who were happy to take a view on my client.

Due to my client’s strong rental income and sufficient affordability, this lender was willing to offer a flexible product that my client would be able to pay off without any charges, no matter how long he decided to keep the existing property for. He would also be able to raise money as the buy to let properties were unencumbered.

OUR SOLUTION

I was able to secure the 3 different mortgages all on tracker rates. This consisted of a main residential loan of £164,000 at a rate of 1.64%, as well as two buy to let loans of £131,000 and £154,000 respectively, both at 2.89%.