Lifetime Mortgage

Onlooker · 21 December 2017 at 9:58PM

Today again 2 of the leading providers are advertising what is available to householders.Showing short term monetary advantages to releasing capital from their homes.They do not describe the effect of,as they put it,added on interest or rolled up interest will have on the future value of your estate.The real word for the rising debt is Compounding Interest which is not like a traditional mortgage.It is interest on the interest you have been charged annually.The effect is no matter what monies you raise and within a short range of interest rates in about 12/13 years the debt against your property will be doubled and in about 25 years tripled and the momentum will continue until the end.Upon making your own enquires ask for the providers comparisons with these examples.Consider

clairebeth · 22 December 2017 at 11:44AM

The point of traditional mortgage repayments is that you pay the interest off in full each month. If not, the interest would compound and the borrower would eventually lose their house. So the main difference is not really in the way the interest is applied, it's that you, the borrower, are not paying the interest, to stop it from compounding.

Onlooker · 28 December 2017 at 1:41PM

To take out Equity Release by way of a Lifetime Mortgage should always be scrutised very carefully.The impact made on your estate in the future ,the residue left to your families should always be taken into account.Obtain figures before entering any contract with any provider.The results will show that what ever you release will double you debt in about 14/15 years and triple in about 25 years and carry on increasing through your lifetime.Hence the name.Also if you want to remove yourself from any mortgage you will be liable to a approx.leaving fee of 25% of the original loan.Get a 10,15,25 year forecast which will show exactly what you will owe.Consder

ACG · 28 December 2017 at 1:57PM

I have just seen an illustration sent to a potential client of mine, page 7 (of 13), shows what the balance of the Mortgage will be at the end of each year for the next 17 years.

I have no idea if this was the case when you took out your Mortgage but it seems that the customer would be going in to this with their eyes open now a days.

Downsizer · 3 January 2018 at 5:50PM

It is again being advocated that the borrower should avoid the interest on their Lifetime Mortgage compounding by paying it off annually.This will be a great saving on the statement in the adverts stating no payments need to be made.Dependant on the size of the Lifetime Mortgage taken out about four to five thousand pounds every year would have to be paid.The question is if you arrive at the point when these payments cannot be met will you then have to revert to compouding interest for the rest of your lifetime period.Again I advocate that the option of downsizing should be considered .Any deal would be done within months without the protractive involment of a Lifetime Mortgage and the implications involved for a unknown number of years.

Onlooker · 13 January 2018 at 3:50PM

Latest figures showed that over 40,000 households borrowed over 3.1 thousand million from the value of their properties.This represents an approx £80,000 loan taken out to be paid back mostly though a Lifetime Mortgage.
The loan to be paid at the end of any lifetime subject to the addition of rolled up,added on,accrued interest.The word for this is Compound Interest which means interest is charged,usually annuly on the sum borrowed.This the most important information to have to hand before commitment.
At the moment a round figure or 6% interest on said £80k would in year one would be £4800,by year
17 it will be £12,193.00.Added to all the inbetween years the debt to be repaid would be £215,421.00
and in a further 3 years £256,570.00. Of course the amounts borrowed and interest rates will vary so it would be in borrowers own safeguard to ensure the detail of said loan before any lifetime commitment
or to consider another option.

robatwork · 14 January 2018 at 11:49AM

This is a weird thread with fairly random postings.

There is an underlying assumption that the people taking out these mortgages are old, financially dumb, vulnerable and preyed upon by the evil banks and financial advisers.

It's more likely that most people know exactly what they're doing when signing up, and if there's any fooling going on, it's the people fooling themselves by deliberately ignoring the effects of interest and on their eventual estate.

I suspect it's just a conversation they don't want to have with their children - "we are taking money out the house now so there will be almost nothing left for you when it's time to sell" isn't an appealing thing to tell your kids.

Of course if there was mis-selling then it should be dealt with appropriately.

Downsizer · 20 January 2018 at 5:34PM

Looking at previous postings on the decision on committing to a Lifetime of financial but unknown
depreciation to anyones estate is as pointed out difficult.Many people are astute as many are vulnerable and any advice should of course be considered.The figures seem to be fairly accurate and open to correction but as been pointed out an entry into unknown future years in peoples financial wellbeing.
In less than one year those who choose the option of Downsizing with the right advice will have a lump sum to enjoy and not a future committed to anyone but themselves.Consider

Downsizer · 30 January 2018 at 10:03PM

A previous reply pointed to the option of downsizing to raise monies for your future.They came from a newspaper article showing how about a third of your paid up property value could be turned into cash.The article used a figure of just over £100,000.In another article an ex-financial minister seemed to indicate that it was not a good option unless they used the monies raised to take out an annity.
£100,000 would give the buyer just over £5000 per annum.The monies raised in downsizing spent at £5000 per year will last for about 20 years.Then the option of a Lifetime Mortgage could be taken shortening the length of time anyone would be involved if need be in paying years of compounding interest.In neither case can anyones lifetime be predicted but choice is at least open to you.

Onlooker · 8 February 2018 at 5:53PM

As the reports coming though have said over 1.8 million householders with interest only mortgage payments are going to have to take up large new options to take care of their futures.There can be no guarantee up or down on house inflation therefore any option taken must be carefully examined.
For example if a Lifetime Morgage of £50,000.00 at 6% is taken against a property valued at £250,000, for example ,those borrowings with compounding interest will rise to a debt of £214,593.00.in 25 years
A housing inflation rate of 1% annually would put the market value of said property at £320608.00
If said figure was 3% annually it would be £523,444.00 leaving approx. £309,000.00 in your estate.As foresaid inflation or even deflation cannot be guaranteed.

Lifetime Mortgage

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