Life time mortgages

James_w

This is a plea to anyone who is contemplating taking out a life time mortgage - don't!! My late father took out one, against our advice and that of my mother for £25k in 2003. I've just asked for a settlement figure following which I needed to sit down and mum is left completely shocked. The figure is now £76k! So assuming that mum lives for some years yet Aviva will own the house. I just wonder what Aviva told dad at the time and whether or not he fully understood the commitment he was making - I doubt it and if he could see the situation now he would turn in his grave, bless him.

Come on Martin please make the public aware of the financial pit falls of the life time mortgage, it's probably cheaper to go to Wonga!!

marathonic

Looks like an interest rate of about 10% which, whilst big, isn't overly large for the particular type of product.

You are correct though - they should be avoided if at all possible.

dunstonh

This is a plea to anyone who is contemplating taking out a life time mortgage - don't!

Why not? These can be a lifestyle saver for people.

The figure is now £76k! So assuming that mum lives for some years yet Aviva will own the house.

There are limits on how much equity can be obtained.

I just wonder what Aviva told dad at the time and whether or not he fully understood the commitment he was making - I doubt it

Equity release requires you to seek legal advice. Also, its best to seek independent advice at the same time.

Come on Martin please make the public aware of the financial pit falls of the life time mortgage, it's probably cheaper to go to Wonga!!

Its certainly not cheaper to go to wonga. However, there are protections in place to prevent people doing them without being fully aware of the consequences. It is not a mainstream product and not something to do lightly but that is why legal advice is required.

9.5% is approx the average interest rate. Wonga is more like 5383%.

You havent mentioned how your father spent that £25,000 and what would have happened if he didnt have that money.

haras_nosirrah

I think a lot more people will be taking these out when all these people who took out interest only mortgages without considering how to pay them back and are getting to retirement age and being told they can't remortgage

they will either have to sell the house or get a lifetime mortgage

marathonic

haras_nosirrah wrote: »

I think a lot more people will be taking these out when all these people who took out interest only mortgages without considering how to pay them back and are getting to retirement age and being told they can't remortgage

they will either have to sell the house or get a lifetime mortgage

I don't know if they'll become as mainstream as this but, if they do, one would expect more players to enter the lifetime mortgage market and rates to come down.

RobinHerts

As an IFA I am constantly being asked about these plans and in fairness they offer a great alternative to downsizing to some people. Some lenders now give the option to repay interest rather than allow it to"roll up". I assume the figure quoted above includes a high early repayment charge which would or should have been explained at the time of taking out and this would have been clarified by a solicitor. I am sorry you are upset by this and these days, an adviser is obliged to recommend family are involved that way there are no nasty surprises.

RobinHerts

rates are now as low as 5%. If someone offered me a 30 year mortgage at 5%, I think I would seriously consider it.