Lifetime Mortgage

robatwork

The 91 year old is a lot more likely to benefit from the product than his heirs. You are assuming that's a bad thing.

MWT

robatwork said:

The 91 year old is a lot more likely to benefit from the product than his heirs. You are assuming that's a bad thing.

... and although I suggested in my post that cars & holidays were not good uses of a lifetime mortgage, at 91 who are we to suggest that a 'round the world' cruise is an inappropriate use of funds

Yes, for clarity, deprivation of assets is always a consideration, especially if care home bills are an immanent possibility, but in the end these assets belong to the generation that built them up, not the generation that follows, so as long as they are well informed and understand what they are doing, dipping into the equity to make those last few years more enjoyable isn't automatically a bad thing, but doing it at 55-60 would be a lot less sensible.  

Onlooker2

A new word to add to our posts is Wait.The financial future of all property owners is at this time is unknown even by the providers.Recent newspaper report stated house price inflation rose by 7.3%,good.In the same article a warning that in 2021 prices could fall by around 5% ,bad.House pice inflation or deflation effects an impact on all who have raised monies this way,i.e a mortgage for your lifetime.As aforesaid borrow short term elsewhere.Waiting is the best option.Yes, as aforesaid,Consider

robatwork

An article speculating on house price movement isn't by definition written by experts. If anyone knew where house prices are going, they wouldn't be writing articles they'd be investing in their wisdom. (Ditto horse racing, stock markets and all other gambling). People who write articles are journalists, and they are paid to write articles. In my world they would have to stand by their words and pay their fees back when it doesn't come to pass.

I say house prices will "probably rise" by 5% in 2021.  That negates your journalist's "could fall by 5%".

Waiting can be correct or wrong advice. Being forearmed with knowledge is the correct advice.

Onlooker2

A Mortgage for your Lifetime is what it is so as described, get your forward costs .The industry will offer openly how much they will lend but they should also open the costs of borrowing this way,i.e.with compounding interest attached ,making it the only way to borrow using this way.Every other way is normal annual rates with payments reducing every borrowers loan in their set time.Interest rates  are historically lower than every.even than that quoted by the providers of this wayor raising monies and the interest rates wil depend on  the borrowers age.Wait,Consider.

Suseka97

Erm.  That's exactly what they do - provide the individual with a illustration of how much they are borrowing and how much they will pay back in interest (compound or otherwise) over the life'time' of the borrowing.  It may not have been that transparent decades ago, but it certainly is now.  

I can easily go online to one of the lifetime mortgage providers and key in my details and play around with numbers based on what I'd likely borrow and the effect of paying back interest or not during its term.  That's without even speaking with an adviser - the internet is your friend here.  No-one these days simply walks into this blindly.

What you say no longer makes any sense!  

Onlooker2

Yet.another.article.giving.a.forecast.on.your.property.value.in.the.near.future.This.quote.from.Halifax.states.a.6%.increase.in........house.price.inflation.during.2020.and.their.opinion.that.homes.will.fall.by.5%.This.coming.year.Do.they.know.what.they.are.........talking.about.Or..believe.the.daily.adverts.by.Eammon.reciting.written.prose.on.tv.supplied.by.another.provider.to.mislead.............listeners.to.act.to..quickly..As.for.opening.your.details.on.line.and.not.have.a.complete.explanation.of.the.impact.of.a.....lack.of...inflation.on..borrowing.money.linked.compounding,added.on.interest.on.your.home.Nobody.knows.As.aforesaid..borrow.short...term.if.you.need.A.mortgage.for.your,lifetime.has.to.be.carefully.considered.Consider.

MWT

Once again, nobody can complete a Lifetime Mortgage application online without receiving advice including all the warnings you are asking for,

Re the property values, if you do believe that house prices will fall in the next year and you are planning to use a Lifetime Motgage then there is some sense in arranging it sooner rather than waiting as the amount you will be able to obtain is based on a percentage of the value so if the value falls so does the amount you can get out, but a fall in value after you have completed the mortgage has no impact on the arrangement you have already made. 

Onlooker2

Any fall in value of your home over your lifetime will bring the amount of debt you are in by borrowing,which will increase annually,guaranteed, closer to the value in your property and therefore closer to the only guarantee you will get from the providers i.e that you will only have to pay back 100% of your properties worth.Hopefully this will never arise but losing 30/40/50% could be be the outcome.for many.
As aforesaid wait ,borrow a shorter term than your lifetime..Consider

MWT

Onlooker2 said:

Any fall in value of your home over your lifetime will bring the amount of debt you are in by borrowing,which will increase annually,guaranteed, closer to the value in your property and therefore closer to the only guarantee you will get from the providers i.e that you will only have to pay back 100% of your properties worth.

That is far from the 'only guarantee' available these days.

If you wish you can protect a percentage of the house value to ensure that some value is preserved for inheritance.

You can get fixed ERC charges agreed at the start which decrease at a known rate over a known period.

You can have the right to make repayments of interest/capital each year if you wish, but not the obligation to do so...

The key point here is that telling people to borrow over shorter terms and with traditional loan products assumes that they have the income stream to obtain such loans and service them during retirement, which is simply not the case for everyone.

Having the ability to get a Lifetime Mortgage that embodies the flexibility to make repayments when possible or skip them when it isn't, can be of value to many who just can't qualify for or service a traditional short term loan.

These products are not the right choice for everyone, but that doesn't mean they are not the right choice for some...