Lifetime mortgage , good or bad ? 11 February at 8:23PM in Mortgages & endowments 7 replies 361 views

Madmax666

I am 74 , Lloyds will not extend my mortgage. I owe £185000 approx , on my house . All I get offered is a life time morgage !!! I am still working . Any new ideas from anyone ? 

MWT

Could be either depending upon your circumstances.

If you can show guaranteed income that would allow you to pay the interest, take a look at a Retirement Interest Only (RIO) mortgage.

If your income source requires you to keep working though, that isn't likely to be viable...

Linton

Madmax666 said:

I am 74 , Lloyds will not extend my mortgage. I owe £185000 approx , on my house . All I get offered is a life time morgage !!! I am still working . Any new ideas from anyone ? 

A lifetime mortgage differs from a normal mortgage only in that it ends when you die or sell the house rather than on a particular date. Interest rates are likely to be totally fixed for your lifetime at a value somewhat higher than those for a fixed term mortgage to reflect the uncertainty for the lender as to when they will get their money back

Rather than pay the interest you could opt for roll-up at some point where the interest is added to the loan. 

So I don’t see a lifetime mortgage as anything to be worried about, it may be exactly what you need.

If you want to investigate further, rather simply considering what your current lender offers may not be your best option, so I suggest you talk to a specialist advisor/broker.

Suffolk_lass

@Madmax666 I have started to look at mortgage options and as you will appreciate, lots of people are reluctant to offer new mortgages to over 65s (less the case if you have an existing mortgage, I think). I have looked at Retirement Interest-Only and found that although the majority are whole like; ie only redeemed when you die or the property is sold, I did find a least one that allowed a term to be set. The interest seemed high when compared to the waged worker options, at 5.9% but I suppose that might be the deal. 

You don't say if you work because you need to or because you enjoy it, but I am led to believe (by the Estate Agent that wants my business, so potentially flawed) that by talking to a broker looking at the whole market, there are products out there. I therefore echo Linton's advice that speaking to a specialist broker is your best bet, to understand better what your options are. 

Welcome to the forum, I see it is your first post.

dunstonh

Equity release is an option of last resort.    So, if you are out of options, then it can be viable.  If you are not out of options, then it is not usually viable.

In your case, you are just substituting one secured debt with another.

Linton

dunstonh said:

Equity release is an option of last resort.    So, if you are out of options, then it can be viable.  If you are not out of options, then it is not usually viable.

In your case, you are just substituting one secured debt with another.

WHy do you say that:?  If you have no beneficiaries for whom a life changing amount of money would be appropriate would it not be better to use the equity whilst you can?

dunstonh

WHy do you say that:?

That is the regulatory position.    

  If you have no beneficiaries for whom a life changing amount of money would be appropriate would it not be better to use the equity whilst you can?

So, if you consider that scenario as you should with any option of last resort....
1) Is it justified?
2) are other options available and are those options more suitable?
3) if justified and no other suitable options, then it can be suitable.

(keeping the effective flowchart response simplified).

I am aware of a recent case that used equity release to place the proceeds into an offshore bond in a trust. They didn't need the money. It was done as part of estate planning.  That sort of transaction would have you initially thinking "no no no". But it was justified and it added up.   It was even sent to the PI insurers for checking first and they were happy with it.     Options of last resort are more about needing suitable justification after considering all alternatives.

Linton

dunstonh said:

WHy do you say that:?

That is the regulatory position.    

  If you have no beneficiaries for whom a life changing amount of money would be appropriate would it not be better to use the equity whilst you can?

So, if you consider that scenario as you should with any option of last resort....
1) Is it justified?
2) are other options available and are those options more suitable?
3) if justified and no other suitable options, then it can be suitable.

(keeping the effective flowchart response simplified).

I am aware of a recent case that used equity release to place the proceeds into an offshore bond in a trust. They didn't need the money. It was done as part of estate planning.  That sort of transaction would have you initially thinking "no no no". But it was justified and it added up.   It was even sent to the PI insurers for checking first and they were happy with it.     Options of last resort are more about needing suitable justification after considering all alternatives.

OK, I was assuming you were implying don't do it unless you would be destitute otherwise. That is what "option of last resort" may sound like to a non-professional.  But I agree the need for appropriate justification is certainly valid.

In the OPs case we dont know enough details but if he is approaching the  end of an Interest Only mortgage perhaps "a last resort" may be appropriate?