Lifetime or payoff mortgage

Concernedretiree

My husband retired last year at 68. He has substantial pension provision which he has not touched which is worth 3 times the equity we hold in our home. We are relying on our joint savings to live on. My only income is a small private pension worth only £20 per week. He is a deeply controlling man and has made it very difficult for me to work even though I had a good career when we met. He has now said he has no intention of paying off the mortgage and wants to get a lifetime mortgage of £150,000. The equity is about £250,000. We have 5 children; 2 each from previous marriages in their 40’s and one who is a post grad student. My deep fear is that if I predecease him he will change our mirrored wills and leave out my children from previous marriage or if he predecease me I will have a large debt I have no means to pay off if he leaves his pensions to his children.

My question is - would it be better to get a lifetime mortgage and keep his investments intact or pay it off. We currently pay £220 per month and he is insisting investments will make more than that.

kidmugsy

I suppose if you divorced him you would handed half the house and half his pension.

I certainly think it rash to trust any spouse, even one of higher calibre than yours, to stick to a mirror will. Who knows what gold digger he might meet after your assumed first death?

See a lawyer.

WillowCat

If the marriage is otherwise good, I'd be thinking of severing the joint tenancy on the house, and writing a new will that leaves your share to your children but giving him a life interest.

If not, then divorce seems like quite a practical idea (sorry if this sounds harsh but I wish someone had said that to me when I let an unhappy marriage go on too long).

Certainly the idea of getting a lifetime mortgage (which is a very expensive way to borrow) to try to make a return greater than the interest seems a very risky business.

jamesd

In purely financial terms it's likely that investments can be used in a pension that would grow by more than the interest cost of a lifetime mortgage. Don't know whether he is making such investments, though.

Similarly, there's nothing wrong with planning to use a lifetime mortgage to increase spending power while alive, assuming that this is desired more than inheritance.

So in purely financial terms this can be part of a sensible plan. I may well do it myself.

Money inside a pension is not part of a person's estate and not distributed according to the person's will. Instead an expression of wishes form is submitted while alive to provide non-binding guidance to the pension trustees. Your mirror wills only affect non-pension money.

Lifetime mortgages now have a no negative equity clause so while you'd have the debt with no expectation of paying it off, it wouldn't grow beyond the future value of the house and you could continue living there anyway.

The neatest solution to distributing evenly to the children while they are still alive so you can see how it helps their lives. This would also deal with the inheritance split problem.

In divorce you'd normally get half of all assets including half of his pension pot, home and mortgage. This is the route that is likely to best assure your inheritance objective.

Dox

If you divorce, you wouldn't necessarily be 'handed half the house and half his pension' - court orders in respect of pensions are relatively rare (other assets tend to be used instead because pensions can get very messy). You might get more, you might get less, depending on the view taken of your application for a financial settlement, assuming you make one.

'Instead an expression of wishes form is submitted while alive to provide non-binding guidance to the pension trustees. Your mirror wills only affect non-pension money.' Depends on the type of pension. If it's a final salary scheme, the rules of the scheme will dictate what benefits are payable to survivors. If it's a personal pension, the pension provider makes the decision on who receives the money - which is almost invariably in line with whoever is on the nomination form.

If you husband is as controlling as you say, he isn't likely to agree that the house is changed from what I presume is a joint tenancy to a 'tenants in common' basis - and you might not want that, especially if he dies first.

I presume discussing this with him is a bit of a non-starter of you wouldn't have turned to strangers. I'm sorry there are no real words of reassurance and encouragement which can be offered, especially while you remain married to him.

Brynsam

Concernedretiree wrote: »

My question is - would it be better to get a lifetime mortgage and keep his investments intact or pay it off. We currently pay £220 per month and he is insisting investments will make more than that.

Are you actually going to get any say in the matter, given you describe him as 'controlling'? He isn't going to listen to you by the sound of things - and saying you've been on forum and people there think etc etc. Would you accept the possibility of taking professional advice (somehow I fear not).

There are several confident assertions that you'd get half of everything if you divorce. That is a common misconception and if you are seriously considering calling it a day, see a solicitor and get some guidance on what might realistically happen.

Concernedretiree

We have been married for 36 years. Since we had our daughter 24 years ago, I have not paid into a pension as I was freelance and he said he was making provision for us both. The bombshell came last June when our IFA came round. I thought our joint savings of £110,000 was going to be used to pay off our mortgage. I had been so careful not to overspend so these savings mounted up. Then he and IFA agreed that this too, would be paid into his wrap ISA. I was so gobsmacked that the next day I froze the savings account which made him so angry I feared for my life. I have since had to agree to withdraw money for new kitchen and also a cruise which were past agreed expenditures so now only £70,000 remain. He says he earned the money, therefore it is all his and constantly threatens me to release it. So far I haven!!!8217;t caved in. I feel totally trapped. I have £20,000 of other savings but wouldn!!!8217;t get far for the rest of my life.

Concernedretiree

He even sold my car registered in my name and bought one for our daughter as he said we didn!!!8217;t need 2 cars. I use ours when he doesn!!!8217;t need it. So stripped of another asset.

ProDave

Sorry but I would be leaving. I could not live under such control. I feel sorry for you.

Brynsam

This isn't about money, is it? Read your own posts and listen to yourself; you don't need 'advice' from anyone on this forum with comments like: 'I was so gobsmacked that the next day I froze the savings account which made him so angry I feared for my life' (unless you're a total drama queen and somehow I think not).

DairyQueen

If you will forgive me for my presumption....

The tone and content of your posts make clear that the issue you face is more complex than simply the advisability of a lifetime mortgage.

You don't give your age but, given the ages of your children, it would seem that you are in your 60s. After 36 years, you are perhaps reflecting on whether you wish to spend the rest of your life bound to your 'controlling' husband.

Please take comfort that you do have options. You are not compelled to stay. Your husband may currently control your joint assets but they ARE your joint assets. He is not the sole owner and would be compelled by any English court to relinquish his custodianship of your share if you divorce.

The starting point of any division would be 50/50 (including every penny of pension investments/income regardless of the name on the tag). After such a long marriage, and given that you are both now retired, deviation from an equal split would be unlikely unless there was something specific about your circumstances (prenup? recent inheritance? trust?) that may trigger ring-fencing in the interest of fairness.

'Need' would be the most likely driver of any deviation in your circumstances as the court would try to ensure that both you and your husband had a home and adequate income. If your husband has pensions in payment then he will be required to split the income with you. His and your state pensions would also be taken into consideration.

A lifetime mortgage may be a reasonable option for you as a couple but unless you are absolutely committed to your marriage as a lifelong union I wouldn't go there. It would add complication to a financial settlement.

Only you know what is best for you but, regardless, I would recommend that you try and transfer more assets into your name. If you decide to divorce the period of most financial vulnerability for you will be the period from separation to completion of the settlement. You would need a short-term source of income, and money to pay a legal advisor as your husband doesn't sound like a 'mediation' type of guy. If you decide to stay then a financial buffer will be reassuring.

Your husband would struggle to resist the logic of, for example, max-ing out your personal allowance (assuming he is a taxpayer and you are not). Also, the prospect of 'free' money available on any pension contributions you make into a SIPP (up to a max of £2880p.a. before age 75) may be a temptation beyond resistance.

Apologies if I am way off the mark but if you are truly in fear of your life then your spouse is both emotionally and financially abusive.

Good luck.