Mortgages Uncovered

Old enough to remember the property crashes in the 1990s and 1970s, there are 1 in 3 baby-boomer homeowners who will still hold a mortgage at retirement age.

In accordance with Impartial.co.uk research who are an online “find a mortgage” service, there are more than 1.4 million homeowners who are aged over 55 years and have at least ten years left to go on their mortgages.

Director of Douglas and Gordon Estate Agents, Ed Mead, says that the most affluent of the baby boomers generation have only just been hit.

“It’s very recent. PostLehman Brothers, they’ve started worrying about where their savings are, and about the future.” After the crash of 1989, it took seven or eight years for prices to come back,” he says. “This time it’s different, because everything has happened so quickly. Prices have dropped by 25% in six or seven months, so it should take only three or four years for them to come back.”

Sixty two year old, managing director, Tony Davison says that last year he decided to sell his 8 bedroom house in south west London.

“I don’t need such a big house, and the plan was to gift each of my children enough money to enable them to get on the then rising property ladder,” he says. “I did some remedial work and put it on the market in June 2007.”

Tony Davison finally accepted an offer of £4.25 million for the house.

“He was a senior man in a hedge fund who apparently had no chain, nor any need for finance, but he pulled out for personal reasons in August, about a week before we were due to exchange.” The timing couldn’t have been worse. There were other offers, but nothing to match the first one. “Gradually, the bottom fell out of the market, so we have withdrawn it now,”

A few things to consider during the slump:

It is expected that the market will hit rock bottom by 2010 at the very earliest, this means that if you do need to sell your house any time soon, there really is no point in waiting any longer. There is a chance that you may get even less for the house this time next year.

If you decide to stay in your house there is an opportunity for you to raise money via an equity-release scheme – which is a specific mortgage which is for the capital-rich and income-poor, where the interest is rolled up to be deducted from the sale proceeds on sale of the property.

If you do have a large garden maybe it is worth considering selling part of it to a property developer.
Rent out the spare room, garage or even a parking space you may have. You could rent the whole house and tent yourself something smaller for now.

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