Retirement Interest Only Mortgage.

Thanks.Ironically if we'd stayed in the old family house there would have been room for DD and children to move in till they got sorted a bit more.But then again schools not as good and all living under the same roof I'm not sure! Appreciate all the advice though and will return when a decision definitely made .

Aah that changes things. I haven’t got any experience of remortgaging etc but I wish you all the best and I’m sure it’ll all work out well for you all.

Don't want to sound negative to suggestions but we have downsized once already. We had a big old semi 6 bedrooms. We're now in a lovely 3 bed 2 bath bungalow and only in our mid 60s with friends and family staying frequently.And a spare room always ready for DGC sleepovers with toys etc. I don't feel ready for something smaller yet.And the garden is my hobby and keeps me fit.
It's something we would probably do in another 10/20 years.If the amount we would have to borrow is really too much then def DD would have to be the one to move.Also house moving is rarely simple IMO. It seems to take much longer for sales to go through.We we're lucky last time but I can't face going through that just now.
I know you can't predict but DH loves to work and has no plans to stop anytime soon.That means would have the ability to pay a certain amount of mortgage with touching savings or his pension.Then if he does retire or can't work well at least have a backup and then would be sensible and downsize again. Hope that makes sense !

I agree with Grannytomany. What you’d like to do is a lovely thing. I would definitely downsize it makes more sense.
You can’t foresee the future of your children’s lives. AC always have a surprise for us 😉 Get yourselves somewhere lovely, smaller garden and future proof.

Washerwoman

Yes DH has already spoken to a specialist mortgage advisor he knows through his work.He works in finance. He is going to come and sit down with us and then we will talk to all our DCs to see what can be done. The amount of equity in our house would still be be enough to pay off the mortgage and buy somewhere else outright down the line if we had enough of mortgage payments or found them too onerous. I love our house but we do have a very big garden that realistically in 10/15 years we may well needs too much upkeep.
I think helping out the DD who needs it most know and keeping mortgage smaller would be less worrying. But DH has always maintained,and seen first hand the problems inequality of inheritance can cause. Our DDs are so close I can't see it but you never know.

Might it not be safer and simpler to downsize now and then share out the surplus money from your house sale with your children?

From experience in trying to help family with money and houses things don’t always turn out as you expect them to and I’d strongly advise you protect yourself from ongoing mortgage payments if at all possible. And any expectations that your children will use any gifted money in the way you think or hope they will.

We have a RIO, which we took out about 5 years ago to finance an extension. We bank with the Nationwide, have had a mortgage in the past with them and have our RIO from them.

The costs of arranging it were minimal. I do not doubt the figure Silverbrook gives but I would say 99 oout of 100, if not 999 out of 1,000 RIO's only cost a fraction of the sum she quotes to arrange.

No we wouldn't give to one and not the others.We know people who have done that but not for us.
Downsizing mortgage and taking into account costs realistically would mean 2 bedroom house in a worse catchment area.Maybe that seems unimportant but as she has a boy and girl who have shared a room but are getting older and now have their own rooms.Plus a nice quiet road with off road parking and very close to us and school. Yes she could manage without those things but as a busy,hard working mum if we're in a position to help her stay I really would like to. We have a lovely home and garden.And would still be able to live our lives pretty much the same as were not into multiple holidays etc.Worse case scenario I can see if one of us is alone we would probably want to downsize again mainly because the garden is so big.Well DH certainly would as I'm the one who spends hours in it.
It really depends on how much more she can add to her mortgage herself so until we know exact figures no firm decision will be made.Thanks.

I really wouldn't give one daughter money and not the other two. I think she needs to sell her home and find somewhere cheaper and for you not to get involved in any of it.

I made it clear I was talking about lifetime roll up mortgages where nothing is repaid until the borrower goes into care or dies. These plans still exist.

Aviva’s website:

The type of equity release we offer is called a lifetime mortgage.

What is a lifetime mortgage?

It's a long-term loan secured against your home, which you can apply for when you're aged 55 and over, and there are no monthly repayments. Typically, the loan and any interest that's built up is repaid when you (and your partner, if you've taken it out jointly) pass away or need long-term care - normally using money from your home's sale, subject to our terms and conditions.

I am aware of three people who have lost all of almost all of the equity in their homes - people who borrowed modest amounts in their early 70s at punitive compound interest and lived into their 90s.

It’s irrelevant as OP is not considering this type of scheme but the horror still exists for many people who have no way out unless they can prove they were missold - and will go on exisiting for people sucked into these schemes.

I think you'll find equity release is no longer what most on here tell horror stories about. You can pay the interest monthly in full or a lesser amount should you wish. You can also pay quarterly or annual payments depending on the lender and even reduce your amount outstanding by 10%. Sounds pretty much like the RIO to me.

Yes, what I described is equity release which I know you had already discounted but I put that there as a warning to others who might be tempted by these schemes.

ER where you draw down periodically as needed rather than borrow a big sum up front is less dangerous but the debt can still accrue to worrying proportions over a long period.

RIO schemes vary but I believe some allow you to make overpayments of up to 10% the outstanding mortgage balance each year without penalty on top of the monthly interest payments.

Unless I'm wrong Silverbrooks the Lifetime mortgage you describe is a form of equity release. That's not what we would do.
The product we've explored so far is different. So eg.150k borrowed with interest only payments. Then if we sold or DCs inherited that 150 would be repaid and the equity remaining could be inherited,used for a smaller property or care fees.From what we understand it may be possible to overpay some months if we choose therefore reducing the amount owed.That has to be determined as we look into it further and see what lenders will offer.Obviously we're aware there will be an initial arrangement fee .We won't be making a rushed or uninformed decision but do appreciate other opinions as you can tell from my early post(!) it's a big decision either way if we use savings or take out a mortgage.

With that kind of genetic longevity you definitely want to swerve a lifetime rollup mortgage - but you know that already.

Just to illustrate:

Current lowest rate is around 6% and highest rate around 8.5%.

If you borrowed £150,000 at 6% (£50,000 to each daughter), in 30 years time you’d owe £860,000. If you borrowed £300,000 at 6% (£100,000 to each), you’d owe £1.7 million.

At 8.5% you’d owe £1.7 million on £150,000 and £3.5 million on £300,000.

You can track house price statistics over time through Land Registry. This for the last thirty years:

landregistry.data.gov.uk/app/ukhpi/browse?from=1995-01-01&location=http%3A%2F%2Flandregistry.data.gov.uk%2Fid%2Fregion%2Fengland&to=2025-01-01&lang=en

Obviously, the more valuable the property to start with, the better chance you have of keeping ahead of the debt but it would need sustained growth over a long period to do so. There have been big dips e.g. after the 2008 crash and during the pandemic. The market always recovers but if a downturn coincides with when the debt has to be repaid (either on death or when the person goes into residential care) it could mean nothing left for children to inherit.

The no pockets in a shrod comment resonates.Of course we don't want to leave ourselves in dire straights.However even though we had some tough times in that DH lost a business in the recession of 91 and then was made redundant years later we feel times are particularly tough for young ones at the moment.
Giving something now rather than them waiting -and not a given but my parents were 95 and 102 when they died-would enable them to actually build up some savings.
It's a balance I guess.Willcheck out the Moneybox and info you have kindly suggested.

Yes, me too. I am divorced and had a fairly reasonable settlement. I have set up a standing order for monthly pocket money for my 6 grandchildren. The oldest two GC get a bit more because they are much older (adults really) than the 4 little ones.
I don’t have expensive tastes. Holidays are a thing of the past - my travelling companions have health issues.

Cossy

I think it’s lovely of you to want to help and you seem to be exploring lots of options - good luck

Indeed.

We help our children&grandchildren when they need us, whatever we can afford. Typically gifts out of income. One of our daughters was a young widow, we leveled out giving to our others years after we helped her.

No pockets in a shroud.

I think it’s lovely of you to want to help and you seem to be exploring lots of options - good luck

I wouldn’t do this I’m afraid. It’s a big risk for your own financial security. Adult children need to stand on their own two feet & bare the consequences of their choices.

Please don’t guarantee your daughter’s mortgage. That would make you wholly responsible for it should she be unable to keep up the payments for any reason and she may find another partner who seeks to take advantage of that. You can’t extricate yourselves from a guarantee without the lender’s agreement, which would not be forthcoming if your daughter is having problems.

That sounds like a plan - and a family that pulls togther.

Helping all three daughters equally from your income in small bites sounds a better plan rather than you getting into debt.

You may already know this but here's another Moneyhelper page that covers IHT implication including gifts from surplus income.

www.moneyhelper.org.uk/en/family-and-care/death-and-bereavement/gifts-and-exemptions-from-inheritance-tax

Here's the HMRC regs on this:

www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm14255

Yes we will explore all options Including the guarantor. Maybe if she talks to her lender and extends the term and amount we can make up the shortfall out of savings.Then make things right with the others later.

Note to self: don't type fast and do proof read.

I just asked my husband and he said he was a guarantor.

Whole other meaning to 'I just asked'.

Thanks for your replies. Just mulling it all over.

That's true.She is in line for promotion and payrise later in the year.And is going to go back to the mortgage lender to discuss extending the term of her mortgage. It seems guarantor mortgages aren't as available now.But if she could extend hers as far as possible we could always help with payments in trickier months in the short term.Neither of her siblings would have any problem with that.Indeed her sister has helped her out recently when her ex reneged on a payment for something he had agreed .
Realistically moving house downwards isn't a great option. She's not in a very valuable property as it is.Plus the costs of moving.We would ideally to help her stay where she is.Not saying she eouldnt move later when things are more settled.

Barleyfields

Norah

Barleyfields

That would entail the husband becoming a joint owner, jointly responsible for the daughter’s mortgage in its entirety, and involve payment of a stamp duty levy based on his already owning another property. And then there’s the question of what happens when she meets someone else and Dad is a joint owner of the house and can be called on to pay the entire mortgage …. I wouldn’t recommend that.

My husband has signed with 2 of our daughters, soon out of University. I wondered why that was not a possibility. Thank you for explaining reasons.

Perhaps he acted as guarantor?

I just asked, I was wrong, he was a guarantor.

Perhaps that would not work for washerwoman.