First time around for a fiftysomething

Alan Harrison
Age: 54
Lives in: Middlesex
Occupation: Lecturer
Earns: ?25,000
Mortgage: None
Debts: ?300 on credit card
Investments: ?1,600 in premium bonds and 300 Lloyds
TSB shares
Pension: Member of occupational scheme
Aim: To find the best way of getting on to the housing
ladder as a first-time buyer

Alan Harrison admits his situation is 'a bit unusual'. He is at an age when many people are close to paying off their mortgages, yet he is a first-time buyer and - like most first-time buyers, particularly in London - struggling to afford it.

He is also something of a new boy in his job as a university lecturer. When he graduated, in 1969, he became an English teacher but after 10 years decided on a change of direction. He went to work for GEC, the telecoms company which later became part of Marconi, where he remained for 13 years. There he became a representative for his trade union and he also fitted in an MA in the sociology of labour at the same time.

When he was made redundant in 1993, he found getting another job difficult. 'My background in trade unionism did not make me very desirable to other employers and being over 40 made me too old for full-time employment with a trade union.'

So he decided to go back to university. He obtained a bursary and did a PhD at Wolverhampton University. From 1994 to 1998 he researched and wrote his thesis on corporate communication with employees. 'What little savings I had were largely consumed in supplementing my bursary during my doctoral studies.'

He then returned to teaching - at age 51 - as a university lecturer at the school of business and management at Brunel University in London. This meant moving down from Walsall in the Midlands and finding accommodation. As a bachelor who had always worked and studied within travelling distance of his parents' home, there had never been any need for him to buy a place of his own. Now he lives in a rented studio flat in London, which costs him £450 a month. He would very much like to buy his own, more spacious prop erty but is not quite sure how he can achieve it with his limited resources. His only remaining savings at the moment consist of £1,600 in premium bonds and around 300 shares in Lloyds TSB. He has no debts apart from a £300 credit card bill, which he is clearing.

Fortunately, he is a member of a good final salary pension scheme and has also accrued provision from his previous jobs. When he first started working he was in the Teachers' Pension Scheme and then joined the Marconi/GEC scheme. He is now a member of the Universities Superannuation Scheme and has transferred his earlier contributions into that scheme. This has given him around 19 years of pension in addition to his current years of membership. By the time he retires he should have a fairly good pension but he would like to save more if he could.

Adviser 1: Ray Boulger

Although Alan may feel property prices are out
of his reach, he could be in for a pleasant
surprise. With current low mortgage rates, and
the fact that he is a professional, it would be
possible for him to get a 100 per cent mortgage. If
he were to borrow four times his income, i.e.
?100,000, he would pay a little more than his
current rent of ?450 on an interest-only basis.

Because he doesn't have a deposit - his savings
are likely to be swallowed up by purchasing costs
- he will need to find a 100 per cent mortgage. He
could also consider shared ownership schemes
and he should certainly contact some housing
associations. Remember that such schemes
involve paying rent on the part of the house you
do not yet own, so Alan may be no better off than
buying outright.

For certain professionals, including teachers,
Scottish Widows will consider lending up to 100
per cent of the property value without a mortgage
indemnity guarantee premium.It has a two-year
fixed rate at 5.69 per cent, a free valuation and a
?150 cashback, which will go some way to help
with purchasing costs. Scottish Widows does not
lend on shared ownership, but other lenders such
as Nationwide will do 100 per cent loans.

Alan's age is also an issue because he is only 10
years from retirement age. One option would be
to structure the mortgage so that he pays off as
much as possible by the time he retires, and then
make lower payments from his pension or use
other resources to pay off the mortgage.

Ray Boulger works for mortgage advisers Charcol.

Adviser 2: David Hollingworth

Living in London is a challenge for those seeking
affordable accommodation. The maximum
amount Alan can borrow depends on the lender.
Normally its three to 3.5 times your salary, which
would give Alan a mortgage of ?75,000-?87,000. It
is possible to borrow up to 100 per cent of a
property's purchase price , but the rates for those
deals are higher than those where the borrower
has a deposit of 5 per cent or more. Alan should,
therefore, try to save as much of a deposit as he
can before looking to purchase a property.

He should avoid lenders requiring a mortgage
indemnity guarantee premium - to protect
themselves in the event of a property being
repossessed and sold at a loss - which can
amount to thousands of pounds. Looking for
lenders that offer help towards legal and
valuation fees would help reduce his expenses
further.

He also needs to think about how long he intends
to keep the mortgage running, and how he will
pay it beyond his retirement age - a question that
the lender will certainly be asking.

An alternative would be to look at the shared
ownership schemes offered by various housing
associations which would enable him to take an
equity share in the property initially, usually half,
and pay a rent to the association on the other
half. This share can then be increased over time,
as and when he can afford to take more. He
should contact local housing associations to see
how they work.

David Hollingworth works for mortgage advisers
London & Country.

· Advice is for guidance only. Do you want to appear in Wealthcheck? Write,
including daytime and evening telephone
numbers, a brief list of circumstances and any
investments, to: Wealthcheck, The Observer, 119
Farringdon Road, London EC1R 3ER, or
e-mail: cash@observer.co.uk. You must be
prepared to be interviewed and photographed.