Cash needed with short term repayment

bonwitco

Hi.

We're recently retired in our early sixties. We own our own home, living in Northern Ireland and have small pensions. We need app £10k cash with a low interest repayment term of 2 to 3 years. What is the best way to fund this need? Is it something like a lifetime mortgage? Any help and advice would be greatly accepted and appreciated.

Brie

any reason why you simply can't go to the bank for a loan?

bonwitco

Hi Brie.

I was of the opinion that this lifetime mortgage thing would be the cheapest but thought someone on this forum would have the experience to give me the best answer with regards to cost.

MorningcoffeeIV

A lifetime mortgage would be the most expensive option, either because of the long term or the high early repayment fee.

But if you have no income, or no descendants and no other options, you may have to consider it.

If not, either get a loan or use 0% credit cards.

Brie

Only thing I know about lifetime mortgages is that they become savings if you are on benefits.  Unlike a loan which is a debt.  Both mean you have a chunk of money in the bank, perhaps just for a few days is you are buying something, so for the first you'd have to report it if you were on means tested benefits whereas for a loan you wouldn't.  

MattMattMattUK

bonwitco said:

Hi Brie.

I was of the opinion that this lifetime mortgage thing would be the cheapest but thought someone on this forum would have the experience to give me the best answer with regards to cost.

Slightly cheaper than burning cash in an old oil barrel, but generally a last resort for most.

What sources of income do you have, just the private pensions or employment as well? 

What do you need the money for? There may be specific funding options, potentially grants if it is for certain home improvements etc.

enthusiasticsaver

Lifetime mortgages are a type of equity release scheme so you need to read up on the pitfalls of these of which there are many. It is not a cheap way of borrowing money.  

I think you will find there is usually a minimum which may well be more than £10k and if your income is insufficient to service them you will have issues. 

A personal loan or 0% credit cards will be the cheapest way but if you only have small pensions you are unlikely to get accepted for these.  Do you not have savings or investments?   If you have taken early retirement presumably you have a plan for funding the early years before state pension kicks in?

sourcrates

Lifetime mortgage/equity release, there are various different schemes available, some require you to make monthly repayments, others don`t, most equity release schemes involve you obtaining a lump sum in cash, and depending on your house value and age, that loan is then repaid when you die.

So in theory you can take a 40k lump sum on a 200k house, interest and charges would accrue, then depending on how long you live, you may be giving away your 200k property for just that 40k in cash, as interest will increase what you owe significantly.

You really need specialist advice from a financial expert, if you go down that path.