Too old for a mortgage

JonBon27

Hi,

My girlfriends parents currently rent a council house and are 52 and 53 yrs old and smokers. They are looking to get a mortgage for €50k over a 20yr period. they are looking to pay back in and around €350 per month. Only the husband is working also.


do you think they could get it??

Appreciate all responses.

drunkmonkey

Get them on champix asap. I've seen 3 people I know die from the age of 50 to 67 who all smoked in the last 7 weeks with one more about to die soon.

I'm not sure if they bank will give a mortgage for any longer than their expected retirement age of 65. For approval they would need life insurance for the amount to be financed at their age they may already have that. It's best if they go have a personal chat with their bank manager. They need to be paying their life insurance as if their smokers or it won't pay out if it's a smoking related disease.

killers1

JonBon27 wrote: »

Hi,

My girlfriends parents currently rent a council house and are 52 and 53 yrs old and smokers. They are looking to get a mortgage for €50k over a 20yr period. they are looking to pay back in and around €350 per month. Only the husband is working also.


do you think they could get it??

Appreciate all responses.

Max term they will get is 17 years. They may be able to waive life cover as they are over 50. So long as the income is sufficient, they have some savings, they have a proven repayment capacity & council rent has always been paid on time they'll have a good chance of approval

golden lane

how much equity is left in the house....if they default....that would be very important..

coylemj

killers1 wrote: »

Max term they will get is 17 years. They may be able to waive life cover as they are over 50.

Surely you are more likely to die if you're over 50 so how does that make it possible to waive the mortgage protection insurance? And the decision to waive the requirement (to have mortgage protection insurance) is one for the lender and not the borrower.

The purpose of mortgage protection is so that a lender doesn't have to put a widow out onto the street if the sole breadwinner dies and there is nobody to pay the mortgage.

In this case the sole breadwinner is 52 and a smoker, I'd say the cost of mortgage protection for him will be so high that it will probably mean the mortgage is a non-starter.

killers1

coylemj wrote: »

killers1 wrote: »

Max term they will get is 17 years. They may be able to waive life cover as they are over 50.

Surely you are more likely to die if you're over 50 so how does that make it possible to waive the mortgage protection insurance? And the decision to waive the requirement (to have mortgage protection insurance) is one for the lender and not the borrower.

The purpose of mortgage protection is so that a lender doesn't have to put a widow out onto the street if the sole breadwinner dies and there is nobody to pay the mortgage.

In this case the sole breadwinner is 52 and a smoker, I'd say the cost of mortgage protection for him will be so high that it will probably mean the mortgage is a non-starter.

You're making some worrying assumptions about his health? Mortgage protection for a 52 yr old smoker over 17 yrs costs €27.83pm (hardly a deal breaker?)

Now go check out Section 126 of the Consumer Credit Act 1995.

Lastly, there is no reason in the world why a bank would not allow the non-earning 53 yr old to waive life cover as she is covered by the act and they are not reliant on her for any contribution towards the mortgage repayments.

If you read my post carefully you'll see I said 'may' be able to waive life cover....

digzy

that figure is interesting.
when i took out my mortgage in my twenties i'd to pay 23 p/month

killers1

digzy wrote: »

that figure is interesting.
when i took out my mortgage in my twenties i'd to pay 23 p/month

Yeah but you probably borrowed a lot more than €50k & over a much longer period??

coylemj

killers1 wrote: »

You're making some worrying assumptions about his health?

Tell that to drunkmonkey (see below). The only health question they ask you these days is if you smoke or not, that alone should put that one to bed..

drunkmonkey wrote: »

I've seen 3 people I know die from the age of 50 to 67 who all smoked in the last 7 weeks with one more about to die soon.

killers1 wrote: »

Now go check out Section 126 of the Consumer Credit Act 1995.

Done, that provision simply says that the lender is not obliged to set up a mortgage protection policy for someone over 50, it does not mean that they are obliged to lend to someone over 50 and in the current environment I can't see him getting a loan from anyone.

Just talk to anyone who's looked for a loan to buy a property in the last couple of years. Even if they are in their 30s and both working, they have to go through all sorts of hoops whereby the bank sends out an engineer to check out kitchen extensions and the like to make sure that the property is 100% kosher before they will give a loan to buy.

killers1 wrote: »

Lastly, there is no reason in the world why a bank would not allow the non-earning 53 yr old to waive life cover as she is covered by the act and they are not reliant on her for any contribution towards the mortgage repayments.

'She is covered by the act' - for what purpose? Please quote the section and tell us the effect. Seriously, I have looked at the act and would be interested in studying the provision you're referring to.

Or put another way - she waives life cover and then the sole breadwinner dies before the mortgage is paid off, what happens next?

killers1

I'm not arguing that smoking isn't bad for your health.. but smokers do live into their 70's and beyond... I notice you didn't mention the premium for a 52 yr old smoker I gave you? Seems affordable...

Your bit about kitchen extensions etc I don't really find relevant to be honest. True, banks have considerably tighter criteria than they used to but will still lend where income is sufficient, affordability has been proven & the property is suitable security for the loan.

In relation to the Act she can approach her lender, tell them that she is not the breadwinner, she is over 50 yrs old and wants to waive life cover... The bank will agree to her request as they are not depending on her to contribute to the mortgage repayments.

'She waives life cover and then the sole breadwinner dies before the mortgage is paid off' - what happens next is the breadwinners life policy pays off the mortgage o/s?? - She waived cover....

coylemj

killers1 wrote: »

In relation to the Act she can approach her lender, tell them that she is not the breadwinner, she is over 50 yrs old and wants to waive life cover... The bank will agree to her request as they are not depending on her to contribute to the mortgage repayments.

'She waives life cover and then the sole breadwinner dies before the mortgage is paid off' - what happens next is the breadwinners life policy pays off the mortgage o/s?? - She waived cover....

That's what knows as a 'curved ball', you never mentioned that there is an existing life policy.

I'm still waiting to hear what you meant when you said 'she is covered by the act'

Supposing she waives cover and it turns out there is no policy, or he cashes it in before he dies, and then he dies - what happens next?

killers1 wrote: »

True, banks have considerably tighter criteria than they used to but will still lend where income is sufficient, affordability has been proven & the property is suitable security for the loan.

Security is only good if they can get vacant possession and sell the property for an amount equal to or more than the outstanding loan. A house ocupied by an impoverished widow doesn't sound like good security to me.

killers1

coylemj wrote: »

That's what knows as a 'curved ball', you never mentioned that there is an existing life policy.

I'm still waiting to hear what you meant when you said 'she is covered by the act'

Supposing she waives cover and it turns out there is no policy, or he cashes it in before he dies? What happens next?

It's not a curved ball at all! In my original post I said they may be able to waive cover. As they are over 50 and only 1 breadwinner the lender will only require the breadwinner to have cover. This will save them money rather than taking cover out for both where the non-earning 53 yr old smoker may have health issues too leading to higher premiums etc...This is what I meant..

What you really want to know is what happens if they have no life cover at all....

If they are declined cover, or only accepted at rates prohibitively more expensive than general or look to waive based on the fact that they are over 50 it will be the lenders sole decision as to whether they can still borrow the funds. The bank would be reluctant to allow the breadwinner have no cover but wouldn't be too bothered about the non-earner having no cover and would be happy to waive. If the bank agreed to allow both of them waive then the risk the lender is taking is that a court wouldn't kick the survivor out on the street. The bank will have good knowledge of the likely outcome if they try to repossess. I would say in the case that the couple had young kids there is no chance they'd allow them borrow without the breadwinner having cover as no Judge will allow a house be repossessed and children put on the street. In the case of no young kids the court may take a different view as the joint borrower took on the loan fully aware of the pitfalls of not having cover in the first place...

killers1

Missed part of your post...

Under the Consumer Credit Act borrowers are required to have life cover except in the following circumstances;
1. Property is no principal private dwelling
2. Cover is declined on medical grounds
3. Cover is only available at a cost hugely more expensive than generally due to medical issues
4. Applicants are over 50

This is what I meant by she is covered by the Act. She is not legally required to have life cover under point 4 above...

As for vacant possession - I answered that in last post regarding the likely decision a Court may come to and whether children were living there or not.

coylemj

killers1 wrote: »

As they are over 50 and only 1 breadwinner the lender will only require the breadwinner to have cover. This will save them money rather than taking cover out for both where the non-earning 53 yr old smoker may have health issues too leading to higher premiums etc...This is what I meant..

Why would a lender want the non-earning partner to have cover - even if she was in her 20s? As far as I'm aware, mortgage protection cover provides that the entire loan is paid off if the principal breadwinner dies during the term.

killers1 wrote: »

If they are declined cover, or only accepted at rates prohibitively more expensive than general or look to waive based on the fact that they are over 50 it will be the lenders sole decision as to whether they can still borrow the funds.

And they will be refused, guaranteed.

killers1 wrote: »

The bank would be reluctant to allow the breadwinner have no cover but wouldn't be too bothered about the non-earner having no cover and would be happy to waive.

The bank won't give a XXXX about the non-earner having life cover so waiving any notional requirement is not an issue.

killers1 wrote: »

In the case of no young kids the court may take a different view as the joint borrower took on the loan fully aware of the pitfalls of not having cover in the first place...

That won't stop Richard Boyd-Barrett and his supporters turning up on the day of the eviction and decrying the bank as heartless bastards for throwing a grieving widow on to the street.

It just won't happen, that's why they won't get a loan without a policy on the breadwinner's life, with or without a waiver from his non-earning partner.

killers1

coylemj wrote: »

Why would a lender want the non-earning partner to have cover - even if she was in her 20s? As far as I'm aware, mortgage protection cover provides that the entire loan is paid off if the principal breadwinner dies during the term.

Did you not read the 4 circumstances in the Act?? Someone under the age of 50 is REQUIRED BY LAW to have life cover unless points 1,2 or 3 apply...(above)

And they will be refused, guaranteed.

Not necessarily..and I have seen cases such as these where banks have waived the requirement for cover...


The bank won't give a XXXX about the non-earner having life cover so waiving any notional requirement is not an issue.

See my first point above....

That won't stop Richard Boyd-Barrett and his supporters turning up on the day of the eviction and decrying the bank as heartless bastards for throwing a grieving widow on to the street.

Does anyone really care what he does??

It just won't happen, that's why they won't get a loan without a policy on the breadwinner's life, with or without a waiver from his non-earning partner.

In reality the chances are they will need to have a policy on the breadwinners life... My point is that life cover may not be expensive as they think because I was aware that they both wouldn't need life cover... I don't think the OP would have been.....

Sorry, I really need to learn how to multiquote....

coylemj

killers1 wrote: »

In reality the chances are they will need to have a policy on the breadwinners life... My point is that life cover may not be expensive as they think because I was aware that they both wouldn't need life cover... I don't think the OP would have been.....

Sorry, I really need to learn how to multiquote....

That's ok, multquoting is very tedious and involves lots of copying & pasting in a text editor session.

The reality is that any life policy on the non-earning partner is of no value to the lender because if the breadwinner dies and there is no income to pay the mortgage, neither will there be any money to pay her premiums either so her policy will probably lapse.

killers1

coylemj wrote: »

That's ok, multquoting is very tedious and involves lots of copying & pasting in a text editor session.

The reality is that any life policy on the non-earning partner is of no value to the lender because if the breadwinner dies and there is no income to pay the mortgage, neither will there be any money to pay her premiums either so her policy will probably lapse.

If the breadwinner dies there is a policy, so the mortgage is paid off....confusing me now...??

A policy on a non-earning partner is extremely important to a lender. Take a family with 3 young kids and a stay at home wife. The mortgage application is assessed on the basis that there is no childcare costs. If the wife dies and had no life cover maybe the husbands income wouldn't cover the mortgage & childminding fees alone... This is the rationale the bank would take on any couple even if they don't have kids when the mortgage is applied for. Hence you have to be over 50 to waive cover and also why not having an income is not a sufficient reason to request the lender to waive your requirement for cover...

coylemj

killers1 wrote: »

If the breadwinner dies there is a policy, so the mortgage is paid off....confusing me now...??

I thought your whole point was that the breadwinner didn't need to have a policy if the non-earning parrtner was prepared to waive life cover.....

killers1 wrote: »

... there is no reason in the world why a bank would not allow the non-earning 53 yr old to waive life cover as she is covered by the act and they are not reliant on her for any contribution towards the mortgage repayments.

killers1 wrote: »

If the breadwinner dies there is a policy, so the mortgage is paid off....confusing me now...??
A policy on a non-earning partner is extremely important to a lender. Take a family with 3 young kids and a stay at home wife. The mortgage application is assessed on the basis that there is no childcare costs. If the wife dies and had no life cover maybe the husbands income wouldn't cover the mortgage & childminding fees alone... This is the rationale the bank would take on any couple even if they don't have kids when the mortgage is applied for. Hence you have to be over 50 to waive cover and also why not having an income is not a sufficient reason to request the lender to waive your requirement for cover...

Agree but in the case being considered, I can't see that the non-earning partner having or not having life insurance is of any value to the lender, that's my point.

killers1

coylemj wrote: »

I thought your whole point was that the breadwinner didn't need to have a policy if the non-earning parrtner was prepared to waive life cover.....






Agree but in the case being considered, I can't see that the non-earning partner having or not having life insurance is of any value to the lender, that's my point.

My point was that they won't have the expense of cover for 2 middle aged smokers when cover for 1 (the breadwinner) will suffice...I agree in this case their is no value to the lender for the non-earner in having cover as a 53 yr old smoker is unlikely to have any more kids...and that's why I said they could waive cover (or part thereof!)

coylemj

killers1 wrote: »

My point was that they won't have the expense of cover for 2 middle aged smokers when cover for 1 (the breadwinner) will suffice

Agreed

killers1 wrote: »

I agree in this case their is no value to the lender for the non-earner in having cover as a 53 yr old smoker is unlikely to have any more kids...and that's why I said they could waive cover (or part thereof!)

I still don't get the way you're phrasing it. You waive a right or entitlement, that doesn't apply here. It's not for her to waive anything.

killers1

[Quote=coylemj;

I still don't get the way you're phrasing it. You waive a right or entitlement, that doesn't apply here. It's not for her to waive anything.[/Quote]

That's just what the banks call the form that needs to signed by the borrower not taking life cover and the co-borrower signs to confirm they are aware the other party has no life cover - mortgage protection waivers

JonBon27

thanks for the responses guys.

Just a quick note the the house is worth about 100K, the council are giving it to them discounted as they have being in the dwelling for over 20yrs.

Would this make much of a difference to the banks lending??

coylemj

JonBon27 wrote: »

thanks for the responses guys.

Just a quick note the the house is worth about 100K, the council are giving it to them discounted as they have being in the dwelling for over 20yrs.

Would this make much of a difference to the banks lending??

It typically will result in a lower rate of interest because the bank may have a threshold like 80% whereby if your loan will represent less than 80% of the value of the house then the mortgage is considered more secure so they will give you a better rate of interest.

The loan expressed as a % of the value of the house is known as the Loan To Value (LTV). AIB for example state the following on their website, I added the bold effect to highlight the relevant part....

A LTV (Loan to Value) Variable rate is a variable interest rate. We have a range of LTV Variable rates depending on the amount you are borrowing relative to the value of your home. With an LTV Variable rate, your monthly repayments may rise and fall over the life of your mortgage.

http://www.aib.ie/personal/mortgages/Fixed-Variable-Split

EBS have three different rates for different levels of LTV: less than 50%, 50-80% and greater than 80%.

http://www.ebs.ie/site/all/Home%20Loan%20Rates?opendocument

You say the house is worth 100K, that may be so but in the current climate you can expect the bank's surveyor/valuer to put a conservative valuation on it so don't set your hopes based on your own valuation.