Lifetime Mortgages

[patacake]

My hubby and I are considering taking out a lifetime mortgage. The extra money would be extremely useful. I am 61, my husband is 71. He has been disabled for almost 25 years. We have no mortgage as we were fortunate enough to buy the house outright 20 years ago. We are both on pensions, with our heads above water but unable to splash out with wild abandon Therefore this system may work for us but I am scared to make the final decision. Does anyone have views for or against such a step? Thanks.

[Ethel]

You could live another 40 years - I assume you would be paying some form of mortgage for this period.

It is a big step - get proper independent advice before you do anything. Make sure you properly understand what you are getting in to and all the implications. Don't be rash.

Don't forget interest rates are set to rise again.

[annie0000]

Do you have any other options to get a lump sum? What about a loan - could you afford the repayments on a small mortgage? Do you have anything that you could sell?

I am not saying that a lifetime mortgage is necessarily a bad thing, but you should consider all your options and seek finacial advice first. Do either of you have children? Who is likely to inherit your home? Could they perhaps borrow money on your behalf in return for the security of their inheritance?

[patacake]

Thank you for your comments.
Apparently there is no mortgage to pay as such. The money is claimed back if we die or go into a home. We do have 3 children between us and there are no problems from them. They are in favour of us doing this but I do have some niggling doubts as I am sure you can understand.

[annie0000]

Absolutely - whilst you will have no repayments, the deduction from the value of your house could be quite substantial. This is your asset and I firmly believe that you should get the benefit of it while you can, but are you sure that your children wouldn't like to preserve that future benefit by investing in it now and allowing you and your husband to enjoy the money now. The interest rate that they would pay by perhaps adding to their own mortgage to release some funds will probabaly be a lot smaller than you will pay on your lifetime mortgage if you live for a long time and you are both relatively young. They will then be able to get this investment back when they inherit their share of your property. I strongly suggest that you get independant advice though as I am not qualified or authorised to do that. Maybe if you have some quotations, you could go through this with your children.

[patacake]

Thank you so much Annie. I will certainly consider your options.

[EverClean]

Look at a lifetime mortagge svheme backed by SHIP - there is a guarantee that you would never be in the position of negative equity. Most lifetime mortgage rates are fixed for the life of the loan, so an increase in interest rates is immaterial.

Please speak to a professional instead of getting "advice" from here. A good lifetime mortgage adviser will talk through the impact a lifetime mortgage will have on any means-tested benefits you currently receive.

Studies have shown that if the value of your home increases by an average of 1% per year then the equity in yout home will remain untouched for the term of a lifetime mortgage.

These are often the best option for people, but because of negativity from an ill-informed press they are seen as a last resort.

[patacake]

Cheers Everclean,
We have an appointment shortly with a professional advisor. I will let you know how it goes. We do not wish to make an immediate decision but would obviously like to consider our options before taking such a step. I would always seek professional advice but I just wanted some input from 'mere mortals' just to get some general views.