Lifetime Mortgage

Onlooker

Another full page advert in the press but this time completely lacking in any warnings in either big or small print in regard to what the adverse consequences will be to anyone signing up to a Lifetime Mortgage..Consider.

Onlooker

The papers are reporting the Financial Conduct Authority is taking a closer look at the Lifetime Mortgage marketplace and updates could take place.In one particular to protect the aged people who have little understanding of the consequences and are therefore vulnerable to making long term mistakes.
The providers are been looked at as to not providing a better understanding of their future commitment.i.e.compounding interest,early repayment charges and the loss of inheritances to pass on to their decendents.Consider

Onlooker

One of the best alternatives to the consequences of involvement with a Lifetime Mortgage is downsizing ,usually dismissed by the providers.Compare the options .A £80,000 00 loan @ for example 5% compounding interest will in 1 year increase your debt to £84,000.After 5 years £102,102.00 after 10years £130.311.00 After 14 years £158,394;00 and continue rising through your lifetime.
The initial costs of downsizing are usually used as a deterrant to do so.The case is the legal and setting up charges are much the same.The Stamp Duty due is the extra cost,a one off payment subject to what price you pay for your future property.If for one example you pay £280,000.00 for your new homemove the Stamp Duty incurred will be £4,000.00 a one off expense and it will be all yours..Compare and consider

Onlooker

12 months ago the Financial Conduct Authority stated it would not for the time being take any action,despite public complaints in regard to the selling of Lifetime Mortgages to people with a marked lack of understanding of the complexities of the product.
As easy as ABC has got to be on its own the most misleading statement in advertising.The Equity Release industry should in its self publish truer facts and figures instead of the people mentioned having to meet with a salesman loaded with over 40 pages of complex information.
Just how big and costly will the temptation of a free Hamper be.Maybe next Christmas a stuffed turkey as well.Consider

Onlooker

A Lifetime Mortgage could be viewed the other way.i.e A Mortgage for a Lifetime.After purchasing your home over a 20/30 year period with a closure date and all paid for .The option being offered is entering into a debt with no set period of time and at a cost which will increase on an annual basis to reduce the equity in your home by a very large amount and also reduce any inheritance to ones family.Examples can be given but no definative date can be given as to what period of time but you should get forward examples as to what the effect will be say on every 5 years in advance befor signing .Alternatives are to had =Consider

Blackbeard_of_Perranporth

OP. When you blew the £45,000 on t@ck, did you enjoy it?

Otherwise, most are aware not to let the promise of some windfall affect their investment decisions!

RunningKatie

As the OP states there is an element of people needing to understand the product that they are purchasing, but that is down to the individual, the legal underwriters of each product must be sure that any individual purchasing this type of product is of sound mind, beyond that, they or the sales company have no responsibility to the individual. As it should be. If someone is deemed of sound mind then it is up to them to ask about the risks and forecasts and how that may affect family inheritance or any issues involved in selling the property to enter residential care. As many people are aware these are not a product to be taken lightly but if you do decide to take one, then you live with the consequences whatever they may be and have no reason to complain if you read you contract...
As someone working in a legal department that handles this type of product along with other house sales (legal conveyancing) I maybe have less sympathy than some, but most people understand these products and the risk involved and if they had any concerns would speak to an IFA who can explain all options in detail. Do not take these products lightly, lifetime mortgages have changed slightly over the years with some providers now offering options to pay the interest off every month, but even with these there are costs to be considered, if the value of your property goes down, the company will still want the full amount repaid when it sells, not a percentage based on what you or your family could sell the property for.
For those that truly understand the risks, these mortgages can be a viable option! But please make sure you understand one before you sign the contract!

Ffazniah

I think that it is better regulated now. I have a family member who has just started looking into this. She could downsize, but estate agent and stamp duty and solicitors fees would cost around £20000 for downsizing to release about £95000 out of current property. She has had an illustration and to release the same amount through a lifetime mortgage at 4.14% a year fixed it would cost £3900 in interest in the first year. She is hoping to be able to pay it off within 6 to 10 years via an inheritance. In six years the amount owed would be around £121500 which would include £27000 of accumulated interest. She has a early redemption fee of about 3% which is £2840 So she would owe £30000 in accrued interest approximately. The point is she can stay in her present home, only paying around £10000 more than if she had downsized just to survive. Even if the inheritance did not come. Her property value would have increased by the time she dies that any heirs would still get a reasonable sum. She also has the option of repaying up to 10% a year of the initial borrowing, which would cover the interest and could repay some of the capital if she wanted. It seems to me like an excellent deal. Everyone can win if you can use the deal to work for your own situation. You just have to be so careful. Remember, yes it is nice to leave something to people, but at the end of the day, you have to live the rest of your live and enjoy it, if you are cash poor and asset rich, there is probably a compromise in there, but get advice.

Onlooker

Quote from financial pages.This Is Money Lifetime Mortgages are exceedingly complex and the penalties are way beyond the understanding of vast majority of the population.
Also commenting in these pages someone said that the sales companies have no responsibility to the individual It is up to them to inquire about the risks and forecasts and the effect they will have on their future issues i.e. family inheritance and having to go into care.Consider

Onlooker

Received a letter from one of the big advertisers in the Equity Release market asking if we would like to switch to a lower rate of compounding interest than we are paying now.Of course we would but then wonder at what cost?Will we have to settle what we owe now or just borrow more?Will we have to pay the early leaving penalty?Will they provide enough information so that we can work out how many years it would be before we saw any moneraty advantage to ourselves?Cant wait.