Lifetime Mortgage

coolmummy

Hello! We are considering a Lifetime Mortgage. We have a lovely house in a city which is highly unlikely to ever see significant price drops, but stupidly, due to earnings (low!) we have an IO mortgage. I'm 61 and my husband is 68 and retired and we are worrying about how to manage when I retire -  also I want to retire or at least cut down sooner to send time with him etc.
We looked at LMs and spoke to the adult children about it who are all quite happy to forego an inheritance, wanting us to be happy (bless em!)

We had a long chat with our mortgage broker who we've been with for years and he also feels its a good idea for us - our current LTV is around 25% - the house is worth over half a million at the moment and we genuinely don't want to downsize and leave our and the kids' home of 25 years.
However, the rate we have been offered is over 8% which seems a huge amount. We were expecting about 6% as we'd researched could be found, and can't understand why he's offering us this. 
Is a higher rate more protection for us?  It's making it slightly scarier as if we live another 25 years the amount will be a million and a half - which are big numbers!

coolmummy

PS Coolmummy is such a daft name - I think I last posted about 15 years ago, when I may have thought I was one! Uncoolgranny nowadays....!

ACG

I dont do equity release/lifetime mortgages so take what I say with a pinch of salt as I am only going off what I hear through the grapevine...

6% was possible back when "normal" mortgages were closer to 2%. With normal mortgages closer to 4%, it seems to make sense that lifetime mortgages are also 2% higher. 

It doesnt matter if the mortgage goes up to £1m or £50m - its not like you or your estate has to pay anything beyond the property value. The equity is likely to get eaten up anyway so your no worse off? 

However one thing I think it is important to consider and I only mention this because of my gran. She had to go into a care home after my grandad passed away. Back then it was £1,500 a week (that was about 3-4 years ago). Thankfully my grandad had a good pension and they had built up savings but after 7 years in a care home that was almost gone and we were close to having to sell their house to carry on paying for it... which is fine, its my grans home the equity was hers to pay for the care she needed. 

I know most people think the council will pay and they will. But we went to look at a couple of care homes and there was a big difference between the cheaper ones and the ones you pay for. Some of them I would never have sent my gran to. 

coolmummy

Thanks for that. Yes the potential care home issue is one of the concerns we have...
We did research though before chatting to our broker and it seems there are 6 - 6.5% offers out there?  I guess we'll just have to talk to him again

ACG

coolmummy said:

Thanks for that. Yes the potential care home issue is one of the concerns we have...
We did research though before chatting to our broker and it seems there are 6 - 6.5% offers out there?  I guess we'll just have to talk to him again

Ah, fair enough. As I said, not my part of the market but I think 8% is fairly common. Maybe if you had some requirements or you were above a certain LTV etc? No harm in going back to them with what you have found, I dont mind if people do that with me. Its always possible we miss things (and it helps to keep us on our toes). 

Linton

Is it worth considering Equity Release? I would expect the interest to be lower than some of the figures quoted here (I was charged 3% fixed for our lifetime shortly before goverment bond interest rates shot up) and it would give much greater flexibility on paying off the interest or even the capital.

You would need to talk to a specialist broker.

kingstreet

Our last two LLL cases were both in the 6% to 7% range. One had payments of interest, the other was interest roll-up. Both at/around 25% LTV.

coolmummy

Thanks.  We've had two discussions with our broker and think we probably will - i just seems a bit scary - which is aft as we can't really lose. We can port if we do downsize and have 400 plus equity - which seems great but not enough to buy a smaller one where we are...and we don't really want to move away - certainly not yet.

coolmummy

Apparently there are some cheaper rates coming out this week??? I dont understand how it works!