Rod will wear full Highland dress to wed Penny this Christmas in a Scottish castle.
The rocker, who went down on one knee to propose during a romantic Paris break has told his family he will marry Penny in his beloved Scotland in December.
The 60-year-old stunned model Penny when he whisked her off in a private jet to the French capital to pop the question and present her with a £50,000 princess-cut diamond ring.
As family and friends joined Rod in London Saturday night for a celebration to mark Penny’s 34th birthday, brother Don Stewart, 74, said: ‘Rod called me on Friday to tell me he had proposed. He sounded very happy.
I spoke to Penny as well, and she is just over the moon. Rod told me they will get married this year and he wants a Highland wedding, probably in December. He wants to get us all in kilts!’
Scots-born Don said: ‘It was a complete surprise for the simple reason I knew his divorce hadn’t been finalised.
I didn’t expect anything to happen until that had all been sorted out but apparently that’s coming to a conclusion within the next few weeks.
But he has touring commitments all this May and June in the UK and on the Continent.’
Around 60 guests, including Scots footballing legend Gordon Strachan, enjoyed a champagne reception at the exclusive Savoy Hotel with the engaged couple.
Then they boarded a luxury Thames cruiser, The Silver Sturgeon, hired by Rod as a birthday surprise for Penny, and guests enjoyed a £200-a-head, four-course meal, followed by a disco.
Both Rod and Penny want the ceremony in a castle and five-star Highland venues, including luxury Skibo Castle, Dornoch, are being considered.
It remains likely that Rod will ask Penny to sign a prenuptial agreement to safeguard his fortune.
Rod’s sister Mary Cady, 75, said he was determined to ensure her brother weds in Scotland.
She said: ‘A December wedding in a Scottish castle will just be beautiful.
I was thrilled when he telephoned me just after he had proposed.
He phoned the children first, and they were also thrilled. They all get on very well with Penny.’
She said she was thrilled he had asked Penny’s parents – who Rod had taken on the trip – for their daughter’s hand before he went down on one knee.
Mary said: ‘I did admire him. That’s the old-fashioned way and my dad would have approved. But Rod is very chivalrous.’ Mary said she wasn’t surprised by the proposal as she could see how happy the couple are together.
She said: ‘It was obvious they were going to stay together. There was a lot of secrecy this week, but everyone assumed it was because of Penny’s birthday.’