Categories
Mortgages

Approach Mortgages for Over-65s Positively

Approach Mortgages for Over-65s Positively

“Old age is always fifteen years older than I am” – Oliver Wendell Holmes

2 min read

Approach Mortgages for Over-65s Positively

“Old age is always fifteen years older than I am” – Oliver Wendell Holmes

2 min read

Are you over sixty-five and finding it challenging to get a mortgage? You’re certainly not alone, according to recent findings1.

Retirement Regrets

Thanks to reasons such as high property prices and rising student debt, many people are buying their first home much later in life. Increasing numbers also want mortgage terms that last longer than the traditional 25 years. When taken together, these trends mean that more people will be in their 60s, 70s or even 80s before repaying their mortgage. 

With the number of people aged over 65 soon expected to surpass those aged 18 and under in some countries, just 37% of potential borrowers aged 65 and over are offered the size of loan requested, compared with 75% of younger borrowers; despite the average loan request being much lower for older borrowers. 

Lenders are looking for evidence that you will be able to make the repayments for the entire term of your mortgage. It’s also important to be able to demonstrate that you’re a responsible borrower with a stable income.

How much can you borrow?

In order to find out how much you can borrow, it is important to understand how banks are computing how much they will lend you.

In Switzerland, banks currently use a theoretical interest rate as a reference (which changes but, for example, could be 5%). They are usually also accounting for a certain percentage of amortization per year. What’s more is that, depending on the bank, they will also take account of maintenance costs typically between 0.5% and 1%.

Having calculated the total costs of the house, it should be lower than 33% of your income. For example, if we use 6% as the figure mentioned above, this means 6% of the mortgage cannot exceed 33% of your income.

You need to take 6.2% of the value of the loan into account, not of the value of the house. In general, the mortgage will be 80% of the house value.

Depending on the bank, how they compute your income is a bit different. But in most cases, they will consider your previous year’s taxable income. There are, of course, some exceptions, though these will be based on individual circumstances and could impact what price range you can afford.

In the UK, mortgage lenders usually take into account the loan-to-income ratio (this is the amount you want to borrow divided by how much you earn) and your deposit. It is typical that the most you can borrow is capped at 5x your annual income (subject to status).

In addition, they need to know the monthly payment you can afford, after looking at your outgoings, debts and liabilities as well as your income. This is known as an affordability assessment.

Nowadays, mortage lenders also ‘stress test’ your ability to keep up with payments. This is to ensure you will still be able to afford the repayments if there are interest rate rises or lifestyle changes such as redundancy or having a child.

Depending on the result of this ‘stress test’, a mortage lender may limit how much you can borrow.

Whatever your age, we can help

Getting a mortgage as an older borrower is not mission impossible by any means. We are here to help. 

Get in touch today and book your initial, free, no-obligation meeting. Send us an e-mail to info@pattersonmills.ch or call us direct at +41 21 801 36 84.

1MBT Affordability Index, 2022 

Categories
Mortgages

Five Common Mortgage Myths

Five Common Mortgage Myths

“There have been few things in my life which have had a more genial effect on my mind than the possession of a piece of land” – Harriet Martineau

2 min read

Five Common Mortgage Myths

“There have been few things in my life which have had a more genial effect on my mind than the possession of a piece of land” – Harriet Martineau

2 min read

Getting a foot on the property ladder is an aspiration that dates back generations. Unfortunately, some mortgage myths are just as old. If you’re looking to buy in 2022, it’s important to know fact from fiction.

1. MYTH: You need a perfect credit rating

A bad credit history can have a negative impact on your mortgage application, but it doesn’t make getting a mortgage impossible. Indeed, there are specialist lenders who offer mortgages to people with less favourable credit histories.

2. MYTH: You can’t get a mortgage if you’re self-employed

It’s also a myth that being self-employed means you can’t get a mortgage. You might have to jump through a few extra hoops to prove your income, but with the rise of freelance and flexible work, many lenders are now better suited to assess different employment situations.

3. MYTH: You should choose a home before thinking about mortgages

The opposite is true! It’s a good idea to meet with us even before finding your dream home.

4. MYTH: You should always pick the lowest interest rate

Although it’s natural to focus on the headline figure, a low initial rate does not necessarily mean a cheaper mortgage. If you’re on a tracker mortgage, for example, the rate can rise at any time. So, a higher fixed rate might end up cheaper in the long term. Different fees can also come into play; we can weigh up your options.

5. MYTH: You need to get a mortgage from your current bank

There’s no obligation to get a mortgage from your current bank. In fact, it’s a good idea to compare multiple providers to find the best deal for your needs.

Get in touch

We can help dispel myths at every stage of your mortgage journey. Our clear and transparent approach will help you find the most suitable mortgage for your circumstances. Just get in touch today via e-mail to edward@pattersonmills.ch or call us direct to +41 78 214 84 32.

Categories
Financial Planning Mortgages

Avoiding Collapse: Managing Your Property Chain in 2022

Avoiding Collapse: Managing Your Property Chain in 2022

1 min read

You’ve found your ideal property, you’re just about ready to exchange contracts, and then you get the call: your buyer has pulled out, leaving your own transaction in jeopardy.

Unfortunately, many property transactions are interlinked in this way, with the decision of one buyer having a knock-on effect on the whole chain, with the worst possible scenario seeing every single buyer losing out on their new home. However, there are actions you can take to speed up the process and reduce the risk of things going wrong.

Go Chain-Free

You can avoid a chain altogether by finding a seller whose own transaction isn’t dependent on the sale of their property. However, this does limit your options, so what steps can you take if you do find yourself in a chain?

Organisation, Organisation, Organisation

Getting your transaction over and done with as quickly as possible limits the chances of your chain collapsing. Be proactive in instructing your solicitor and other professionals, ensure you’re completing forms and sending them back as quickly as possible, and chase up any delays.

Rent for a Short Period

Depending on your circumstances, it may be possible to sell your home and rent for a little while so that you’re not dependent on a buyer. Likewise, if your seller’s transaction falls through, you may be able to ask them to rent on a short-term basis so that you can still complete your purchase.

Let Us Help

Another way you can speed up your transaction and protect your chain is by securing an agreement in principle with a mortgage provider before beginning your search. We can help you there!

Get in touch today and book your initial, free, no-obligation meeting. You have nothing to lose and potentially lots to gain! Send us an e-mail to charles@pattersonmills.ch, call us direct at +41 78 214 84 32.