Lifetime Mortgages (including free advisor)

MikeFloutier

Hi, I'm just researching Lifetime Mortgages as we have decided to take one out later this year.

One thing that puzzles me is that Providers (lenders) seem to offer vastly different interest rates - eg Pure and More to Life both offer products with rates from 6-8% at present.

I see that "fee free" offers come with the caveat that "the interest rate will be higher". However it appears that that isn't a big issue - eg. The Pure Emerald F product is 0.07% cheaper than it's "fee free" counterpart.

I'm guessing, although I haven't really seen this in the blurbs, that the higher rates will relate to bigger LTV applications; all the other features seem to be broadly similar.

However, I've only been looking into all this for a couple of days and I would appreciate some sagacity from you guys.

Many thanks.

Mike

Linton

We took out a lifetime mortgage with LV 2 years ago at 3% fixed for our lifetime.

I dont know how the lenders determine the interest rate, it seems to be calculated specifically for your circumstamces. As well as LTV I guess age also will come into the equation.  You will need an advisor with appropriate qualifications, either one provided by the lender or one you choose yourself.  Obviously one provided by the lender can only advise on that lender's products whilst one you choose can search across all providers for the best deal for your needs.  

dunstonh

You need to be wary of how the lifetime mortgage is funded.  Some use gilts and these can be cheaper but the exit charges on repayment can be a lot higher.

DullGreyGuy

MikeFloutier said:

One thing that puzzles me is that Providers (lenders) seem to offer vastly different interest rates - eg Pure and More to Life both offer products with rates from 6-8% at present.

LTV and your age, both increase the risk that the property wont cover the loan when you die/go into care and so interest rates increase to offset the risk. 

MikeFloutier

Thank guys, I do get the business about LTV and age and health etc; the actuarial calculations. BUT that happens after all the info is disclosed, whereas what I’m talking about are advertised rates, on different products from the same company. And I can’t seem to see any differences in the features.

I guess I may need to have a closer look, I do want to have a firmer handle on what’s going on before getting as far as committing to a provider and a deal.

Thanks also for the tip about Gilts and the ERPs. I’ll keep a good look out for that.

Thanks again guys!

DullGreyGuy

MikeFloutier said:
what I’m talking about are advertised rates, on different products from the same company. And I can’t seem to see any differences in the features.

Its always easiest to work in specifics rather than generalities so if you are comparing two products then highlighting them and someone can then says what the differences are (if any). 

Have done very little work involving lifetime mortgages but what appears to be very small differences become big when you compound it over the number of years the average duration is 

MikeFloutier

Hard to believe, but having asked my initial question on 30 Jan (when I’d just started researching this), we’ve now applied to more2life and the valuer is visiting tomorrow.

They've offered us 5.68% (fee free), which seems fairly reasonable to me, but I’m keeping a weather eye on rates prior to committing.

FYI, for anyone shopping for ER, I researched local advisors and solicitors pretty extensively and was surprised at the variety of prices. Advisors ranged from £500 to £1795, and solicitors £550 to £1700. As you can imagine, I’ve gone for the cheapest.

Thanks again for all your advice with this!

MWT

MikeFloutier said:

FYI, for anyone shopping for ER, I researched local advisors and solicitors pretty extensively and was surprised at the variety of prices. Advisors ranged from £500 to £1795, and solicitors £550 to £1700. As you can imagine, I’ve gone for the cheapest.

There is also free advice available, either with some of the High St. lenders or from StepChange Financial solutions...

MikeFloutier

MWT said:

MikeFloutier said Advisors ranged from £500 to £1795, and solicitors £550 to £1700. As you can imagine, I’ve gone for the cheapest.

There is also free advice available, either with some of the High St. lenders or from StepChange Financial solutions...

Many thanks MWT, that’s certainly something that anyone looking for Equity Release needs to know; can’t believe I haven’t come across Stepchange.

It would certainly be helpful to have a sticky on the forum containing this info (among other things), £500 is not to be sniffed at, and certainly £1795 isn’t!

Thanks again.