Lifetime Mortgage

Not personally kangaroo but I know someone who has and has no regrets. Like you, they were struggling with bills and upkeep of their home and were constantly worrying about how they were going to manage.

They now feel as if a weight has been lifted and can even spend money on meals out and short breaks away which they'd been unable to do.

Obviously you need to do your research and go for an established reputable company, as well as taking into account the impact this could have if at some time in the future, you need residential care.

Thanks Smileless. Do you happen to know if they paid back the interest on a monthly basis?

If you are struggling with Bill's, are you able to downsize to follow your budget?

A concern with your approach is when this item is inherited - it could get messy

I've done exactly this so it's just an interest only mortgage! I've given my daughter money to help her with house refurbishment and she knows her inheritance will be less. I have a policy where the payments are voluntary so if I couldn't pay the interest in the future that's no problem or my daughter could make them so she knows how much she'll get!

It sounds as if you are intending to use your current disposable income to pay the interest and then use the capital you have raised against the house for it's upkeep. How will you manage when costs go up and the amount of disposable income you have decreases. If you borrow the amount on which you can afford to pay the monthly interest (assuming there is such a loan) how will you manage when that capital has been used but other costs come up as borrowing more would take more of your income to pay the interest.

Yes ,we did that nearly 20 years ago ,the monthly payments have varied due to interest rates rising and falling.But the amount we borrowed has stayed the same. It enabled us to travel the world while we we were healthy,help with childrens weddings,and do home improvements.We talked it over with family first and they were in full agreement once they realised that the borrowed amount didn't alter.
Ours was with a reputable building society that dealt with normal mortgages.
We never regretted doing it and while I could now redeem the mortgage I prefer to keep it and have actually bought Premium bonds instead .They now produce a decent return with the hope of a big win .

kangaroo we are doing just that at the moment. In our case we were considering an interest only mortgage or a Lifetime mortgage, which is another word for equity release.

We are building an extension that gives us a large kitchen/family room and utility room. Convenient for us now and it makes the house more saleable if and when we need to downsize.

We chose a lifetime mortgage because, although we will be paying the interest so the capital to be paid back doesn't increase, if at any time we had problems doing this we can just stop paying the interest and roll it up into the capital. With a straight forward interest only mortgage, if you cannot pay the interest, you are in trouble and the Building Soc, could, in theory, foreclose on you.

For us the equity release/Life time mortgage option had lower interest rates fixed for a longer time and still had options to pay back some or all of the capital if we wished to. We assume we will clear the mortgage if and when we downsize. There will be a declining penalty clause if we repay in the first 10 years, but this is a risk we are prepared to take.

We are doing this with the Building Society where I have a current and savings account and with whom we had an ordinary repayment mortgage in the past. In other words a longstanding and reputable organisation that we can be confident using.

Hi
Can I ask you ladies that have done this
Pay interest
I’m wanting to get ds on property ladder with a deposit 50k
Would this be classed as getting rid of assets were 63, say if I needed care home in future? Would the ask ds for the 50k back ?
What about inheritance tax on the 50k, is there any?

Sorry for all the questions, just something I thought about reading the thread

@Clio51

Inheritance tax is charged on your whole estate - everything you own less any debts. But your tax free allowance ranges from £325,000 to £1million depending on your status - single, widowed, legal couple, rental or property owner and then at estate of £2million + may taper back down to £650,000. That's the short version !

Clio51 Unless you are already ill and can see that you may need healthcare soon, you should be OK. The longer you stay in good health after doing this, the less likely that they could claw it back.

For example if you live 15 year or more (78), say, and the chances of that are very good if you are in good health now you will defintely be OK, and only 1 person in 10 goes into care, anyway, so you may never need it.

On Inheritance tax, if your house is worth less than £500,000 and you do not have a large quantity of savings, say £100,000 or more, you can forget about it, your estate will not be valuable enough for inheritance tax.

That's the kind of morgage we have too. Interest only. Good at the moment because the interest rate is so low, and it's a small mortgage anyway.
We changed in about 2004 as our previous mortgage had come to term and they wanted their capital back, which we couldn't do!
At the time it was more difficult to get an interest only mortgage so we were lucky.
The interest repayments can also be included in your tax return to help reduce your liability for tax, if necessary.