Lifetime Mortgage

poppy10_2

Onlooker why did you take out a lifetime mortgage to pay for a new car and a holiday, without reading the terms and conditions for what you were signing up for?

Onlooker

Published Equity Release figures show that over 80,000 householders reduced their holding in their property by over £4,000 million pounds in 2018.Over 130,000 had the face to face with the providers rep.and got to read the multiple pages of information.As stated in the adverts 80,000 decided to borrow .What was not published was the point that over 50,000 homeholders decided not to get involved in this multi-billion pound industry of which once you opt in getting out is costly procedure beyond a lot of poeples comprehension.Consider..

getmore4less

Onlooker: you need a holiday.

kingstreet

Onlooker wrote: »

Published Equity Release figures show that over 80,000 householders reduced their holding in their property by over £4,000 million pounds in 2018.Over 130,000 had the face to face with the providers rep.and got to read the multiple pages of information.As stated in the adverts 80,000 decided to borrow .What was not published was the point that over 50,000 homeholders decided not to get involved in this multi-billion pound industry of which once you opt in getting out is costly procedure beyond a lot of poeples comprehension.Consider..

So what you're saying is, a load of people considered interest roll-up products and some proceeded with them as they were suitable and others didn't because they weren't?

Isn't that how things are supposed to work...?

You're becoming very tedious continually bumping this thread but then ignoring people who might actually benefit from your experience.

Shame on you being interested only as far as you are (or think you are) affected.

veesharp

Actually thinking about deleting the thread except that it’s already helped one or 2 to make an informed decision. Yes, onlooker is so tedious I keep nodding off...

Harryo

I have been following this post since November. We have now made a decision to take out a Lifetime Mortgage after spending hour upon hour Googling and speaking to people. I thought I would share some of my conclusions, which may help others:
1. As Kingstreet said, a Lifetime Mortgage is a solution for some people, me included. I would have gone for an ordinary mortgage or RIO mortgage, which I could have afforded but is outside my reach because of personal circumstances. The only other viable option would be to sell my house which I do not want to.
2. Again, as Kingstreet said "Rollup interest is potentially bad". It is also potentially good in this case. It has to happen as that is what interest on borrowed money is all about. If you do not pay back interest then that is what you have to accept. Just like those who borrow on credit cards for 30% or those that take out Payday loans for thousands of a %. It is not something I have ever had to do but I appreciate that sadly there is no other option for some people in order that they get through another day.
3. Interest rates - it would seem these are available from 3.6%. I am looking at something a little higher which suits me better. I always try to go for a good deal and it does bite me that I will be paying just under 2% more than I could have got with a long term ordinary fixed rate mortgage (if I could get one, which I cannot). I consider this a small price to pay really to get me out of the hole I am in, which I dug.
4. The interest is fixed though for as long as the Lifetime Mortgage runs. There will be no nasty surprises which could have a major impact on me.
5. You have the oppertunity to pay off around 10% per annum without any penalty and therefore clear the borrowed amount in around 14 years. That is what I am hoping to do and in which case the borrowed amount will be no different to an ordinary interest only montgage.
6. There is an inbuilt safeguard that if I cannot afford to pay anything then at least I can stay in my house which I would not be able to do with an ordinary mortgage. The greatest comfort re this is that if I peg it my wife can just stay put, if she so wishes or move with no penalty to pay. OK the price is rollup but then I accept that. The worst is that when we both die there may be no equity left but then we wont need any whichever vertical direction we will be going in. The kids may not get anything but neither do a lot of other kids in this country. The kids will survive though I am sure.
7. There is the option to move to a smaller property at any time without penalty. It may be necessary to pay back some of the loan amount from part of the proceeds. I have not ruled out having to do that at some point as I get even more decrepit.
8. There is also the option to sell at any time and just pay back the loan amount. Under these circumstances there may be a hefty penalty to pay but there again there may be no penalty dependant upon the T&C's and also Market Conditions.
9. The property can be sold without penalty if long term care becomes necessary. (To me, the thought of all my equity going towards keeping me in an existence in which I would not wish to participate is worse than the thought of roll up interest.).
10. If people want to use a Lifetime Mortgage to fund a dream car, holiday, trip to the moon or whatever, that is fine as long as they fully understand the implications. At worst, the only cost is money.

For my wife and myself, we have concluded that a Lifetime Mortgage is the best option for us. We have done all research which we consider to be necessary, read every word of the essential paperwork and asked for clarification of anything which is not clear or we do not understand. We have made the decision by ourselves and if we have overlooked anything or our circumstances change in an unforeseen way, we will only have ourselves to account.

Thank you to everybody who has contributed to this forum. Every word has been beneficial to me.

Harry

veesharp

Very happy to hear this H... it sounds as though, like me, you have left no stone unturned and that you have opted for the exact same product I have.
You have eloquently written all the points, well thought out.. something I’m not very good at doing!
In addition, my daughter who is 25 & unable to get on the property ladder, has been instrumental in wanting to protect the equity by opting to contribute what is in effect, as you say, an affordable amount of interest in order to protect the equity. Meanwhile I will deal with the optional 10% as and when I am able. It’s a win-win situation for both of us!

Thanks for your contribution!

veesharp

Haha!! Maybe there’ll be a new product out soon... interest free!! 😂😂😂

Onlooker

An article published recently announces that the Financial Conduct Authority is to intervene with Fund supermarkets and,using their words,crackdown on exit fees which will enable investors to buy and sell without any restrictive obstructions.
The should be applied to the Equity Release market and the Early Repayment Charges of 25% in many cases.This makes switching Lifetime Mortgages to a cheaper percentage rate expensive thereby leaving borrowers locked in to their provider All last years borrowers will have an average debt of six figures after one year.The industry could change if told and still make their profits whilst helping the borrowers.look to switching.Consider

Onlooker

Columns in the papers recently pointed out the dangers of passing assets from anybodys property to their families as a help to get them on the housing ladder.,.A problem arises when anyone has to go into long term care.Local council are known to accuse house- holders of deliberate depletion of assets and can recover thousands of pounds from say a family member who has used such monies as for example a deposit for their new home with no set future time limit..All taken in good faith but can go wrong .To do this using monies from equity release,which was used as an example of borrowing, will have a even more serious effect on their .assets,It can happen.Consider.