I AM RECEIVING A PERMANENT CARERS PENSION. WOULD I BE ABLE TO GET A MORTGAGE FOR A CHEAP PROPERTY

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My fixed rate mortgage is about the finish with northern rock and i am now 55 and have had to retire early due to serious illness. my wife works and i have a pension and incapicity benefit. do you think i will still get a mortgage, 5 years left and about 40k and insurance in place should the worst happen. many thanks my mortgage was fixed rate for 3 years and thats about to end, hence need a new mortgage.

It's going to be difficult for you, please go to the C.A.B.and get some professional advice, I do advice work and I must admit I haven't a clue here...all I can think of is that you accept the ordinary mortgage that your provider will offer you.Also , I'm afraid your insurance is invalid as you are not in work...but...please take all documents to the C.AB. and get free advice there.

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I have a large mortgage which is being paid down by the tenants, especially good at the moment because my mortgage tracks the base rate therefore payments are low. however i have little savings and want to start investing in a pension. i have surplus income at the moment. what should i consider when deciding whether to pay down the mortgage or feed money into my pension fund? does compound interest work equally as effectively when paying down debt as opposed to saving?

You have to look at the rate of return you think you could get from the retirement or pension fund vs. the interest you are paying on the mortgage. As long as you do not have a prepayment penalty, every $1000 you pay down your principal now chops more than $1000 in payments off the end of your loan, because you are not paying interest on that amount for many years. If you owe little or none when you retire, the amount of money you need to retire is reduced when those payments end.

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I am about to start a new job and to will be making my own pension arrangements. would you advise me to pay into a free standing pension (with it's tax advantages but loss to fees) or to use the same contribution to repay as much of my mortgage as i can?

If you can find a defined-benefit pension (the classic kind), you might be better off with that because the company is paying for it. It's called "defined benefit" because the company is "required" to give you the benefit that they describe in the policy, given your years of service. If you're talking about a 401(k), also called a defined-contribution pension, Suze Orman thinks you're better off paying down your mortgage. Since you say, "making my own pension arrangements", it sounds like you're talking about a 401(k) (or 403(b) for non-profit). There are really two aspects to this question: The purely financial part and the emotional part. What is your emotional reaction to living without a mortgage (or living with one). I believe that people do many things they don't like to do just to pay off their monthly expenses, which is primarily made up of your mortgage. How would your life be different if you had a smaller "nut" to pay every month? Would you keep the job you have and invest your current mortgage payment? Or would you quit your job and hope to scrape by with a job you love? As far as the financial side is concerned, the best method is to make some assumptions and see how the two scenarios would play out (i.e., pension vs. mortgage). Here is the fundamental question: Can I make more money from my tax-deferred 401(k) than I would save in interest payments to my mortgage? This question is further complicated by the tax treatment of these interest rates. Since the IRS allows you to deduct your home mortgage interest, you can determine your actual (after-tax) interest rate as x *(1 - y), where x is your mortgage interest rate (APR) and y is your usual tax margin rate (e.g., 20%, 28%, 31%, etc), both expressed as a number between 0 and 1. Just as an example, suppose you're in the 28% tax bracket and you're currently paying 5.875% on your mortgage. Your after-tax interest rate is .05875 * (1 - 0.28) = 0.0423 or 4.23%. If you were to invest in a taxable account, 5.875% is the rate of return you have to exceed in order to do better than paying down your mortgage (because your earnings are reduced by taxes). When comparing this to your 401(k), you want to consider that you get a tax break when you contribute, and you might be paying less in taxes when you withdraw the money. You pay taxes on both the principal and the earnings (when you withdraw), but you only got a tax break on the principal. If you've got 20 years before retirement (or more), about half of what you withdraw is earnings (depending on rate of return). I ran a quick projection in a spreadsheet, where I assumed you: are 5 years into a 30 year mortgage of $250,000 at 5.875%; are in 28% tax rate for 20 years, then 20% tax rate after that; make 4% above inflation for the next 16 years, and then 2% above inflation after that; contribute $10,000 per year for 10 years, then $15,000 for 10 years, then withdraw $45,000 during retirement until you pay off your mortgage and then 32,543 after that . All amounts are in 2007 dollars. The results: You would contribute $250,000 in 20 years, and have a balance of $346,080; you would come out $10,130 ahead in taxes (comparing your tax savings when you contribute vs. tax bill when you withdraw); the account would last until 2036, or 10 years of withdrawals. Fidelity has a really detailed retirement planning tool that analyzes your portfolio (to get a stochastic rate of return), and then takes into account your Social Security, selling your house, buying a boat (other major purchase, like a wedding), etc. In full disclosure, I wrote the program that projects your portfolio into the future. On the flip side, assuming you were 5 years into a 30 year mortgage of $250,000 at 5.875%, if you pay down your mortgage at $10,000/yr (in addition to your standard payment) for 10 years, then $15,000/yr, you will have it paid off in about 11 years. Then you would take your $15,000/yr and contribute to a 401(k) earning 4% above inflation. You would be able to withdraw 32,543 until 2031. So in this scenario, you are slightly better off keeping your mortgage and contributing to your 401(k) right away.

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My father would like to help us purchase our first home by co-signing on the loan for us. (yes, we both understand the implications of him being a co-signer on the mortgage). he is retired and living on his pension (not collecting ss just yet). is this possible on a fha mortgage?

If the mortgage loan bank/lender is okay with it, then they will decide. He will have to provide financial statements, of course.

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However, his very soon to be ex-wife does not have her name on the mortgage and is threatening to walk away from the house. (she convinced him to refinance before he went to court and that rate is now thru the roof. payment was 800. less than 3 years ago and is now 1400.) i'm just wondering if he'll be able to obtain a mortgage and rent the place out---it's a 3 bedroom home in a big college town---rather than lose even more than he already has.

The mortgage companies will want him to have more income to cover a debt payment. He is probably ahead to sell it renting it out means hiring a property manager and paying top dollar for all repairs. If he has friends with good credit and good income who could buy it then sell it back to him that would be nice and they could live in it. He may have a problem landing a job after prison so having sold it may not be able to get it back. His wife may be required to pay him support after the divorce since he isn't a wage earner.

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My father (72 years old) has an endowment mortgage of £30,000 which has 2 years left to run. the dwp are helping him towards the interest on this loan (about £100 per month). if i was to help him pay off the mortgage in full, will his pension credit be affected (he and my mother receice about £180 per week)?

Once the mortgage is repaid they will stop helping with the interest.

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I have a mortgage with 13 years left to run. when i took out the mortgage, i was sold a pension and an endowment policy with a 50/50 split. i have already successfully claimed compensation for mis-selling re. the endowment part and am pursuing the pension side. before i consider converting the whole lot or just half to a repayment mortgage, is it true that i will not be able to claim the lump sum to pay off my mortgage when the term ends, as i will only be 50 years old? has the age changed to 55 for being able to use the lump sum payment? this is driving me crazy! thanks for your responses so far, i would just like to add that the pension was taken out solely with the intention of repaying 50% of the mortgage, it isn't my main pension for retirement.

My advice is to seek proper Financial Advice but take care when choosing and adviser. We were in the same boat and still are though I'm already retired and my husband will be soon. We cashed in our endowment with the intention of paying off the mortgage plus my husband pension but I took ill when I was fifty five and was unable to work so we are stuck with a mortgage after retirement because I paid the mortgage. What you propose sound very sensible and a repayment is the best way forward though you can get flexible mortgages though they are generally interest only. As regards to your pension are you aware that you can only draw down 1/3 in cash without incurring a hugh penality, so like I said find a good advisor preferrably not one who is not going to sell you a mortgage as they will get a percentage of that sale. Best pay up front for good advice whilst you can. All the very best and I hope you get things sorted before too long. Us we are still faced with a dilema but that's anothe rstory.

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Due to lifes ups and downs i find that i will still have a mortgage to pay when i retire in three and half years time. i am so worried it is ruining my life. i do have a private pension that i have been paying into and would like to know if i can use this to pay off the outstanding amount of my mortgage. i have been to a financial advisor but he was not very helpful i have to say.

You can take a tax free lump sum from your pension when you reach retirement. This is usually up to 25% of your total pension fund. A few years ago, self employed people were encouraged to use a pension as a repayment method for a loan/mortgage, this was because of the huge tax advantages provided by pensions. If you take the lump sum, the amount of pension you receive each year will be reduced. Ask your pension company for a forecast, it is fairly easy for them to give you an illustration. Good luck.

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As a mortgage consultant, I know the answer is yes. However the most common way of this being done is using the 25% tax free cash upon taking retirement. You will need to contribute sufficient funds to your pension to ensure projected benefits are four times your mortgage at retirement!