Re: Pensioners short of money

AnnieC_4

As a 71 year-old widow/pensioner with no capital apart from my flat worth about £220K, I am coming to the end of a 2-year Tracker Mortgage, interest only, for £55K, which now requires me to make a decision about what to do next.
Each time I remortgage with the same company, I have to pay a reservation fee of about £400 (which I don't have) or go for a 'no reservation fee' package which costs more.
An independent mortgage advisor has suggested that I replace this with an equity release scheme, paying off the mortgage and leaving a little bit over as a buffer.
Originally, when I mortgaged my property 4 years ago, I rejected the idea of an equity release scheme because interest seemed to be compounded - and I did not want to go down that path.
I have three children and would like to leave at least half of the value of my property to them on my death, which is another reason not to go down the equity release path.
I have a reasonable work-related pension and can afford up to about £225 per month mortgage payments if necessary - I look on it as 'paying rent' to live in a flat that I love.
Any advice would be most gratefully received.

Ian_W

Hi AnnieC,

Equity release schemes basically fall into 2 catagories:
Lifetime Mortgages - where a sum is lent against the value of the home and the interest roles up to be repayed after your demise.
Reversionary Schemes - where a % of the house is bought and when sold in above circs the same % is owned to the lender.

No reason not to consider the latter and still be able to leave 50% of the value of your home to your children.

I posted some links to fact sheets from age concern, help the aged and the umberella organisation for these types of schemes on the thread below:
http://forums.moneysavingexpert.com/showthread.html?t=139513&highlight=equity+release

Have you talked to your kids [suppose they're a bit old to be called that!] about this. I'm sure they would be less concerned about how much they would receive than how well you are able to live in your retirement. My mother is a little older than you and TBH if I felt she needed to use equity release to have a reasonably comfortable and worry free time, I'd drag her kicking and screaming to do it. I bet they would feel the same way, you sacrificed for them as children, you don't need to now and I'm sure they won't want you to.

BoL whatever you decide.

silvercar

If you talk to your children, could they find £400 between them so that you can get a decent rate, after all it is their inheritance you are protecting.

Maybe you should look for fixed rates that last longer than 2 years so that this problem doesn't keep occuring.

AnnieC_4

Dear Ian
Sorry, haven't quite got the hang of the way things work on here yet. I pressed 'Thank you' when I really meant to be more specific. I printed out all your recommended fact sheets and will study them in the morning, when I am bright-eyed again. They look to be just the advice I need. Thank you so much. AnnieC

cattie

AnnieC wrote:

Each time I remortgage with the same company, I have to pay a reservation fee of about £400 (which I don't have) or go for a 'no reservation fee' package which costs more.
Any advice would be most gratefully received.

Are you absolutely certain that a no reservation fee mortgage costs more in the long run? I ask because I remortgaged a few months ago with my existing lender & the figures showed that there were literally only a few pounds difference in the total overall cost.

Before sticking with my own lender I'd had a word with Nationwide, where the advisor, comparing the fee/versus no fee tracker had told me he wouldn't recommend me taking the fee option as the total overall amount I'd pay would be roughly the same for both products.

Admittedly my mortgage is a bit under half of yours, so this may have a big bearing on things. IanW will probably know this, he is clever with finacial things like this.

margaretclare

We did the 'lifetime mortgage' type of equity release a couple of years ago on this 2-bedroom bungalow in south Essex. But then, we're not bothered about leaving value of property to any descendants. Our main concern was not having to pay the £250 or so every month on a repayment mortgage.

Where I made a mistake was in changing from an interest-only to a repayment mortgage not long before we decided to change to equity release, and of course there were fees to pay. I also wanted the place in joint names - was recently remarried (Jan 2002) and wanted us both to be equal.

What you could do, of course, is change to a repayment mortgage - you're happy to pay as if you're paying rent. We could have continued paying the repayment mortgage until we were 83 (that was Abbey). Why not consider doing that?

Aunty Margaret

AnnieC_4

Many thanks for helpful answer. I am pretty sure that I shall stay with my present lender(N.W.), do as you suggest and go for a no-fee tracker. They have been very reliable and helpful so far and, of course, I don't have to go through all the palaver of new valuations and different fees. Thanks. AnnieC

AnnieC_4

"Before sticking with my own lender I'd had a word with Nationwide, where the advisor, comparing the fee/versus no fee tracker had told me he wouldn't recommend me taking the fee option as the total overall amount I'd pay would be the same for both products." [/QUOTE]


Many thanks - I have done just that and with the Nationwide as well! :beer: