# upper age limit on investment mortgage



## rustyjack (21 Jan 2011)

hello,
my father (aged 66) would like to remortgage a mortgage in order to extend the loan term as the capital payments are quite high on his current mortgage which runs out in approx 4 years (age 70). his current lender will not extend his term.

his details are as follows:

rental income: 100,000
mortgage: 400,000
LTV across rental properties: 20 percent (worst case)
Age 66

so, he is in quite a good position financially but he is using other income to pay off the mortgage at present and ideally would like the rental properties to take care of their loan so to speak. 
has anyone any experience of getting a mortgage with a lender with a term up to say age 75 or 80?


thanks,
rusty


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## aristotle (21 Jan 2011)

Rental income of 100k per year?


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## rustyjack (21 Jan 2011)

yes, 100k per year.

just had chat with mortgage broker in cork saying very little chance as the banks have no money for investment mortgages.


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## jambo (1 Feb 2011)

The figures make no sense. Rental income of 100,000 would comfortably service EUR 2,000,000 worth of debt. LTV of 20% with debt of 400,000 would value the portfolio at EUR 2,000,000. What's the problem?


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## Greta (1 Feb 2011)

jambo said:


> The figures make no sense. Rental income of 100,000 would comfortably service EUR 2,000,000 worth of debt. LTV of 20% with debt of 400,000 would value the portfolio at EUR 2,000,000. What's the problem?



I think the problem is that 400,000 remaining on the mortgage has to be repaid over a very short period of time - 4 years, i.e. that averages at 100,000 per year, which is what the rental income is. However, OP's father also has to pay interest, repairs/maintenance, insurance etc as well as tax, so he has to subsidise the repayments from his own pocket and would like to extend the term to avoid this. Except, due to his age, he is unable to extend the term, the bank won't let him. 

So that's the problem as far as I understood it


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## jambo (1 Feb 2011)

Good point, I glanced over the 4 years bit. With that LTV ratio he should be able to get finance despite his age? It seems like he's quite a good risk prospect.


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## Greta (1 Feb 2011)

It looks like the banks aren't interested in investment mortgages and don't care if he is a good risk or not...

I'd personally just stick with it for 4 more years if I could afford to (as OP's father seems able to), putting any retirement plans on hold. At least then after 4 more years I wouldn't have to worry about paying the mortgage, interest rates etc!


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## rustyjack (2 Feb 2011)

*thanks for replies*

thanks for replies and concern!!

greta,
you summarised the problem exactly.
our preferred option is to keep going and pay off 100k mortgage per year for the next 4 years but it is a tight squeeze as the business that my father is using to help pay off the mortgage is not doing well and could go under.

i know he is not in a bad situation financially in that worst case he can sell his assets to pay off the debt but now is not the best time to be forced to sell.

any experience of getting investment mortgages from banks would be helpful..

thanks again,
rusty


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## Greta (2 Feb 2011)

Rusty, does your father own just one property or a property portfolio? If he owns several properties, could he sell just one of them and use the proceeds to help him pay off the mortgages on other properties?

Could you or other family members loan him the money privately? (With a proper loan agreement, of course.) Not the whole amount of the mortgage, just the shortfall between his mortgage repayments and rental and any other income he has, if it comes to that?
Once the mortgages are paid off, he can then repay the private loan.

It does seem that it's best to hang on if at all possible.


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## Bronte (3 Feb 2011)

rustyjack said:


> our preferred option is to keep going and pay off 100k mortgage per year for the next 4 years but it is a tight squeeze as the business that my father is using to help pay off the mortgage is not doing well and could go under.


 
How much 'extra' does he need for the 4 years other than the rental income. I hope his business is limited.  If not he may need to start thinking about putting property into his spouses name.


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## rustyjack (3 Feb 2011)

Bronte said:


> How much 'extra' does he need for the 4 years other than the rental income. I hope his business is limited. If not he may need to start thinking about putting property into his spouses name.


 
thanks bronte,
his other company is limited. He doesnt owe any creditors etc.. it is just a recent drop in business which means he cannot generate any profits and it looks like the business wont pick up anytime soon so most likely the business will need to shut down. that leaves him trying to pay off 100k per year (capital plus interest) for the next four years for his 400k mortgage. His rental income (gross) is max 100k so he wont be able to make repayments. therefore he either has to sell up (bad time) or he needs to renegotiate the loan. his current lender is not open to the idea so i am wondering if anyone has had any good experience of getting a buy to let loan from any of the banks?

thanks,


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## rustyjack (3 Feb 2011)

Greta said:


> Rusty, does your father own just one property or a property portfolio? If he owns several properties, could he sell just one of them and use the proceeds to help him pay off the mortgages on other properties?
> 
> Could you or other family members loan him the money privately? (With a proper loan agreement, of course.) Not the whole amount of the mortgage, just the shortfall between his mortgage repayments and rental and any other income he has, if it comes to that?
> Once the mortgages are paid off, he can then repay the private loan.
> ...


 

thanks for your help greta... his family has loaned him money already so really the only option is to try to renegotiate the loan with another lender.
do you know of any bank who is the market for buy to let mortgages?

thanks again
rusty


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## jambo (4 Feb 2011)

I think Bronte may have been asking about his prospects to generate the extra income needed to cover the shortfall and how big that shortfall is. I understand that taking on alternative employment at 66 may seem wholly unattractive. He might be lucky and find a new lender but thinking laterally might yield a contingency plan.


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## Bronte (4 Feb 2011)

My question wasn't answered so maybe I wrote it incorrectly.

There is rent of 100K to pay the mortgages and running costs and tax on rental income.  What we don't know is how much is the subsidy from the business.  That is the figure the OP needs and from that we may be able to generate ideas.  

For example as the lender is not budging could the OP borrow a personal loan to pay the mortgages, this is a crazy idea, but it may make sense if one had all details.  

Rustyjack in his last post mentioned that actually there is no money from the business, and maybe a decision needs to be made in relation to the business. 

In this climate, and without real facts and figures, but in any case, thread very carefully before committing 'relations' money toward this.


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## rustyjack (4 Feb 2011)

Bronte said:


> My question wasn't answered so maybe I wrote it incorrectly.
> 
> There is rent of 100K to pay the mortgages and running costs and tax on rental income. What we don't know is how much is the subsidy from the business. That is the figure the OP needs and from that we may be able to generate ideas.
> 
> ...


 
sorry bronte for not detailing the full figures to you.
the business was generating around 30,000-50,000 per year towards the mortgage depending on how well it was going. it looks like this will drop to near zero this year.
100k rental income gross (after management expenses, taxes etc) i think was coming out around the 65k mark. therefore, he is going to be short around 30-35k. he is getting state pension to cover his own living expenses.
these are approximate figures but gives you an idea.

thanks for your help,
rusty


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## Bronte (4 Feb 2011)

So he needs 35K per year for 4 years. 140K is the solution to the problem. 

Can he sell any one property and get 140K? Can he reduce his living costs to bring down the annual 35K cost. Has he any savings or other assets?

In 4 years time he will have how much of the rental income as pure profit.  How can he get at that to help with the 35K annual cost.  I'm thinking out loud here to myself.  Will come back on this after a bit of mulling.  It should be obvious but after the Mise Eire post my head is in a tizzy.


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## Bronte (7 Feb 2011)

If he didn't pay tax on the rent for 4 years would that solve the problem.  Would be liable for penalties and interest though.  But revenue are being more flexible in relation to arrangments.  Is it more important to pay the bank or revenue.


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## Greta (7 Feb 2011)

Bronte, that's not a bad idea at all 

If OP's father is able to get any work paid work at all, he should be able to earn at least something, thereby reducing the shortfall. Then he might be able to raise the remainder through a combination of personal loans, maybe CU loans, sale of some assets (if he has an expensive car or a painting, for example) and tax underpayment.

It's best to still submit tax returns but maybe pay less than full tax liability? Maybe contacting the Revenue and pleading hardship, might they agree to come to some arrangement to pay tax later, with interest, of course. But this might reduce other penalties and surcharges.

Also what about mortgage on the PPR, is that mortgage-free now? Would it be possible to remortgage that? If banks are not giving investment mortgages, would they be more willing to give an owner-occupier mortgage? 

Or declare one of the investment properties his PPR and get a mortgage on it with higher LTV than is currently?


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## Greta (7 Feb 2011)

Another point is - what can the bank actually do if OP's father fails to pay the mortgage in full, provided he pays all interest and some (if fact, most) of the capital repayments? 

While it is understandable that the bank does and will continue to pressure him for the full payments and will add extra charges if he falls in arrears and will also damage his credit rating, can the bank actually repossess any of the properties? Considering that OP's father is doing his best to pay and will in fact be able to repay in full, just a couple of years later than the bank would like.

In these circumstances would the bank really go to court seeking to repossess the properties? And would the court grant the repossession, considering the short length of time left before the mortgage will be paid anyway, the efforts made to repay and the very low LTV?

Maybe the bank is just bullying OP's father, pressuring him into selling at the wrong time, as due to low LTV the bank will still get its mortgage repaid anyway, even if properties are sold at a big loss?


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## rustyjack (8 Feb 2011)

Bronte said:


> If he didn't pay tax on the rent for 4 years would that solve the problem. Would be liable for penalties and interest though. But revenue are being more flexible in relation to arrangments. Is it more important to pay the bank or revenue.


 thanks very much for help with this bronte. It is much appreciated!!
That is not something we had considered...as he has always paid his taxes but if we cannot get another investment mortgage from another bank it may come to negotiating with the both the tax people and the bank to see who will be more flexible!!


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## rustyjack (8 Feb 2011)

Greta said:


> Another point is - what can the bank actually do if OP's father fails to pay the mortgage in full, provided he pays all interest and some (if fact, most) of the capital repayments?
> 
> While it is understandable that the bank does and will continue to pressure him for the full payments and will add extra charges if he falls in arrears and will also damage his credit rating, can the bank actually repossess any of the properties? Considering that OP's father is doing his best to pay and will in fact be able to repay in full, just a couple of years later than the bank would like.
> 
> ...


 
greta, thanks very much for your help - much appreciated. I suppose my father is in unchartered territories here in terms of his current bank pushing him to pay off mortgage. We have no experience of going to the courts in terms of disagreement so would prefer to remortgage if at all possible with another bank. Otherwise, a chat with the tax people as bronte suggested may be another option..


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## rustyjack (8 Feb 2011)

looking2011 said:


> my parents both remortgaged lately and were told that term had to conclude at age 70..there was no mechanism in the banking system for 70+ so they had a shorter repayment period than they wanted.
> Same with insurances, mortgage protection, income protection etc etc all end at age 70+ across most companies (correct me if there are any exception I dont know about)
> I would say renegotiation, the bank sound like they want a neat tidy end to the mortgage asap which is not necessarily in your father's interests.


 
thanks looking. 
rusty


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