Early Retirement - what does it mean

Linton

jamesd said:

pensionpawn said:

jamesd said: ...

I discussed this with a mortgage lender yesterday. Ineligible for their retirement interest only mortgage because they ignore income drawdown and ineligible for a lifetime mortgage which requires a property value of at least £125k.

"ignore income drawdown"...? So you could demonstrate > £500k (with ~£50k in cash) in your pension, and hence a healthy "income", and they weren't at all interested? Besides someone showing a bank balance of £500k (or balances accumulating to £500k) what could the lender possibly view as more secure?

The view expressed was that it could all be spent in one day. The pre-pension freedoms concern that largely hasn't happened.

The person I was discussing it with said they had discussed it internally before and she'd raise it again.

Linton said:
I have an interest only lifetime mortgage partly based on my drawdown income.  It was arranged through an IFA/broker who talked directly to the underwriter to explain my financial situation.  At that time, a few years ago, it seemed that the mortgage companies did not really understood drawdown. There weren't any questions as to whether the drawdown was actually sustainable.

Which lender?

Nice that at least one had some understanding.

It's still quite a few years before I'll need such a product.

Hodge Lifetime

pensionpawn

Linton said:

pensionpawn said:

FIRE is fine in principle as long as you don't 'mortgage' your 20s & 30's to then find that you don't make it past your 40's or that you didn't factor on your body not being able to cash the same cheques as it did in your 20's and 30's. You have the live in the moment as well as make provision for the future. Tomorrow isn't promised.

Yes but if you die in your 40's  (very few people do) your pension and other savings no longer matter to you - you are dead.  If you do not  keep sufficient for the future you could live your final miserable decade in what you consider to be dire poverty. So the best policy ISTM is to spend now at a rate you will be able to afford to spend for the rest of your life.

I agree, however my point being that all work and no play is literally a waste of time if you get hit by a bus just before you decide that it's time to quit the rat race, kick back and enjoy all those plans you made for the future. Equally spacing out the work and the play during your younger years, even if it doesn't help you retire at 40, may be a better plan.

cfw1994

Linton said:

jamesd said:

pensionpawn said:

jamesd said: ...

I discussed this with a mortgage lender yesterday. Ineligible for their retirement interest only mortgage because they ignore income drawdown and ineligible for a lifetime mortgage which requires a property value of at least £125k.

"ignore income drawdown"...? So you could demonstrate > £500k (with ~£50k in cash) in your pension, and hence a healthy "income", and they weren't at all interested? Besides someone showing a bank balance of £500k (or balances accumulating to £500k) what could the lender possibly view as more secure?

The view expressed was that it could all be spent in one day. The pre-pension freedoms concern that largely hasn't happened.

The person I was discussing it with said they had discussed it internally before and she'd raise it again.

Linton said:
I have an interest only lifetime mortgage partly based on my drawdown income.  It was arranged through an IFA/broker who talked directly to the underwriter to explain my financial situation.  At that time, a few years ago, it seemed that the mortgage companies did not really understood drawdown. There weren't any questions as to whether the drawdown was actually sustainable.

Which lender?

Nice that at least one had some understanding.

It's still quite a few years before I'll need such a product.

Hodge Lifetime

Interesting....not come across them before.

I can’t see the rates on their website: how do they compare against “regular lenders” (who of course might shy away from such borrowers, as jamesd has found!)

Linton

cfw1994 said:

Linton said:

jamesd said:

pensionpawn said:

jamesd said: ...

I discussed this with a mortgage lender yesterday. Ineligible for their retirement interest only mortgage because they ignore income drawdown and ineligible for a lifetime mortgage which requires a property value of at least £125k.

"ignore income drawdown"...? So you could demonstrate > £500k (with ~£50k in cash) in your pension, and hence a healthy "income", and they weren't at all interested? Besides someone showing a bank balance of £500k (or balances accumulating to £500k) what could the lender possibly view as more secure?

The view expressed was that it could all be spent in one day. The pre-pension freedoms concern that largely hasn't happened.

The person I was discussing it with said they had discussed it internally before and she'd raise it again.

Linton said:
I have an interest only lifetime mortgage partly based on my drawdown income.  It was arranged through an IFA/broker who talked directly to the underwriter to explain my financial situation.  At that time, a few years ago, it seemed that the mortgage companies did not really understood drawdown. There weren't any questions as to whether the drawdown was actually sustainable.

Which lender?

Nice that at least one had some understanding.

It's still quite a few years before I'll need such a product.

Hodge Lifetime

Interesting....not come across them before.

I can’t see the rates on their website: how do they compare against “regular lenders” (who of course might shy away from such borrowers, as jamesd has found!)

Lifetime mortgages are a fairly niche area. When I was looking there were very few lenders who did them, none of them well known. Since they depend on life expectancy the lenders are more likely to have a life assurance background than the normal high street lenders.  I think Aviva and L&G are now in the market. You would probably need to, or be well advised to, use a specialist mortgage broker/IFA.

The rates are higher than with a fixed term mortgage since the lender does not know when they are getting their money back, but much less than equity release and seem to be very dependent on the circumstances.I am paying around 3.7%.