Wexford People

I’m 42 and looking to buy a home. Can you advise about mortgages?

Q I’M a first-time buyer looking for a mortgage but as I’m 42 years of age and on my own I’m finding it next to impossible to get approval for an amount sufficient to enable me to buy a home in my area. I have heard some lenders will now allow mortgages up to age 80 years of age. Would this help me to buy a home? A THANKS for your question. This is an issue that’s coming up more and more often given that the average age of a first-time buyer is now over 30. Switcher and remortgage­s are well in excess of that.

There are currently two lenders in Ireland that lend up to the age of 80. There are some terms and conditions like you must have a private pension but it looks like paying your mortgage well into retirement could become a harsh reality for numerous homeowners.

Paying a mortgage over a longer term could mean you will qualify for a larger mortgage by reducing the monthly repayments, but you need to do the math.

More and more individual­s are continuing to make mortgage repayments post-retirement, as they take on loans with terms exceeding 30 years. These extended terms are designed to assist people in stepping onto the property ladder by offering more manageable monthly repayments.

However, a 35-year mortgage essentiall­y ensures that anyone currently over the age of 32 purchasing their first home will still be paying it off after reaching state pension age. This likely means they will need to factor mortgage repayments into their pension budget. Many retirees will be even more cash poor and property rich in the years ahead.

Longer mortgage terms are not just gaining popularity due to lower monthly repayments, but also because more people are extending their terms in the hope that the market will eventually swing in their favour. In the current higher rate environmen­t, many individual­s likely hope to extend their term now and then pay extra when they can or refinance at a more competitiv­e rate in the future.

Those with long mortgage terms should try to make overpaymen­ts on their monthly instalment­s to reduce their mortgage quicker and save money on interest in the long run. Even a small monthly overpaymen­t of €30 – less than €1 a day on a €250,000 mortgage at 4% over 30yrs- can pay off the mortgage one year and seven months earlier and save €13,815.27 in interest.

Individual­s need to consider a significan­t financial burden that previous generation­s rarely had to contemplat­e: the possibilit­y of dipping into their pension pot to pay off their mortgage. While longer mortgage terms can provide some short-term relief in the form of lower mortgage payments, they come at the cost of significan­tly higher overall interest charges over the life of the loan. I have run three calculatio­ns based on the same mortgage figures. Total interest payable over 25 years would be €145,877, over 30 years €179,674 and over 35

years would be €214,914.

Another option is to increase your pension contributi­on to ensure that your pension can pay the additional mortgage repayment in retirement or ensure the tax-free lump sum can clear some or all your outstandin­g mortgage balance.

As always, we’d recommend that you get advice from a regulated Financial Broker.

This article aims to give informatio­n, not advice. Always do your own research and/or seek out advice from a Financial Broker before acting on anything contained in this article.