Lifetime Mortgage

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Reasons2b
Reasons2b Posts: 2 Newbie
in Mortgages & endowments
Newspaper reports show that Equity Release through Lifetime Mortgages as grown by 44% this yeas.this in effect means that 1000`s of homehomers have reduced theri holding in their property ,judgeing by the figures,by as much as 25%.,an amount which will raise every year in their future.For whatever short term reason that money is spent on the debt will escalate .A 70,000pound ,the average,loan, will turn into six figutes in less than 10 years.Thereafter,dependant theis lifetime will double and could eventualy triple.all of which will leave a deminished legacy in the futureThe headline in the paper says Dont blow your reserves.Think about that.

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  • dunstonh
    dunstonh Posts: 116,387 Forumite
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    all of which will leave a deminished legacy in the future

    But allow the person/couple to have a lifestyle in retirement from an asset that generates no income. Of course, they can decide to have no life and live on the breadline to pass more on to their children.

    Equity release is an option of last resort. However, given the massive rise in property values, especially within cities, where often the person is asset rich within their residential property but income poor, then it can make very good sense to them.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • dimbo61
    dimbo61 Posts: 13,716 Forumite
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    The costs of selling and downsizing to a smaller property can be considerable !
    Then many people want to spend money making a property a home ( new kitchen, bathroom etc )
    Equity release may suit some people
  • Thrugelmir
    Thrugelmir Posts: 89,546 Forumite
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    Why do people have to leave a legacy. Their money. Their choice.

    With an ageing population many people don't even inherit until they themselves are approaching retirement age.
  • Downsizer
    Downsizer Posts: 16 Forumite
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    Now is the time to wait before commiting to Equity Release though a Lifetime Mortgage.
    The Finacial Conduct Authority, whom I am lead to believe through these columns,is
    looking into an alternative for homeowners in their later years which may exclude having
    to sell up,downsize or finish their years seeing the families,that some may care about
    lose monies to a third party.
    The FCA are considering the simple fact that anyones mortgage does not have to cease
    at any age but can be taken ,as with a expensive Litetime Mortgage,until they pass away.
    Wait and compare it may well be a better choice than what is on the table now.Consider
  • dunstonh
    dunstonh Posts: 116,387 Forumite
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    The Finacial Conduct Authority, whom I am lead to believe through these columns,is
    looking into an alternative for homeowners in their later years which may exclude having
    to sell up,downsize or finish their years seeing the families,that some may care about
    lose monies to a third party.

    The new mortgage product being considered is a mortgage for life. it will be an interest only mortgage where you make monthly payments just as you would do with a normal interest only mortgage, except that you do so for the rest of your life.

    When you die, if you have insufficient or no life assurance, the debt will be taken off the value of the estate (just as now). If you have life assurance to the required amount, the debt can be cleared by that.
    Wait and compare it may well be a better choice than what is on the table now.Consider

    That is unlikely as equity release is an option of last resort or an option used by people with no dependents. They dont want the monthly payments. The majority of those doing equity release do so to raise money. Not to increase their monthly commitments.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • Silvertabby
    Silvertabby Posts: 9,023 Forumite
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    edited 16 September 2017 at 10:37PM
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    We don't have children to leave our £300K mortgage free house to.

    Do we take some form of equity release (in the future) to pay for a cleaner and a gardener and other luxuries or do we carry on as we are and leave the lot to nieces and nephews we haven't seen hide nor hair of for over 20 years? Go figure.
  • Downsizer
    Downsizer Posts: 16 Forumite
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    The Financial Conduct Authority plans to alter mortgage lending to help homeowners to avoid selling or moving home could be wel lworth wating for.The options available may not be as restricting as the present Equity Release/Lifetime Mortgage market is.there maybe cheaper interests rates.Rates not involving COMPOUNDING INTEREST.There maybe openings to switch providers without an up to 25% early repayment charge.There maybe a cooling off period.Who knows but to have an alternative choice could be worth waiting for before commotting to your future.
  • kingstreet
    kingstreet Posts: 38,770 Forumite
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    Interest roll-up is not, nor has it ever been, the only option.

    It is very, very important that people get independent advice about these products as mistakes can be extremely costly.
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
  • robatwork
    robatwork Posts: 7,094 Forumite
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    Silvertabby wrote: »
    We don't have children to leave our £300K mortgage free house to.

    Do we take some form of equity release (in the future) to pay for a cleaner and a gardener and other luxuries or do we carry on as we are and leave the lot to nieces and nephews we haven't seen hide nor hair of for over 20 years? Go figure.

    I would have thought the cats' home.

    Or me.
  • Onlooker
    Onlooker Posts: 145 Forumite
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    Equity Release will reduce the value of your estate Check with the provider you are considering.
    Examples using current newspaper advertising and the effect of Compounding Interest
    10years 15 years 25years
    20,000 @ 5% 32,577 41,578 67,727
    50,000@5% 81,444 103,946 169317
    85,000@5% 138,456 176,708 287,840

    Request comparisons before committing
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