When my mum reached retirement age, her mortgage lender requested she repay the mortgage in full. She knew it was coming but thought she'd still be working & have the option of another mortgage. Having had an interest only mortgage for a few years the balance was too much to pay off, and at "her age" and with no income other than her pension she couldn't get another traditional mortgage.
So she decided to sell up and rent instead. ( a beautiful seafront apartment I might add)
Had she known better, she could have stayed where she was as the option for a lifetime mortgage is a real, proper, thing! I never knew either.
There have been great innovations in this industry over the last several years. As we, our parents and grandparents are living into our 90's and beyond, pensions (we'll get on that one another month) and lifetime mortgages look very different these days.
Even in 2016 there were around 35 products (loans to you and me) now 5 years later there are around 500!
Chris Prior is a lovely man & colleague. I "interview" him in the video below and lean on his 40 years experience in the financial industry to find out more.
So you don't have to downsize if you don't want to. Chris tells us about the couple in their early 70's who decided they wanted to buy their dream 4 bed home and actually upsized!
What if you want to stay put in your lovely home and have enough fun money in your retirement over and above your pension? I thought having £100k in your pension was the dream but in reality it's only going to give you around £5k a year on top of your state pension. They're around £7-10k a year so it's not a vast sum of money post 67 years old. And I'd quite like to retire way before that wouldn't you?
But like I said we'll explore pensions more fully in another month, they blow my mind!!
What if, like a third of parents / grandparents, you want to help your adult kids onto the property ladder especially whilst the stamp duty is on hold?
What if you realise you absolutely do need that kitchen from Neptune?
What if your daughter is getting married, or is likely to in a few years & you want to help pay for it?
That vintage e type Jag got your name on it?
Or you want to go exploring in a motor home across Europe?
As my mum always says, it's about needs and wants!
Chris explains in the video that some people need extra cash to clear credit cards and other loans as they head into retirement. Life can get tricky whatever your age & this past year has meant this is more a reality than not.
Others simply want a nice lifestyle, and unless they give their son a few thousand he's likely to still be living at home when he's 40!!
What I learned from Chris is if you've equity in your home you can look at the option of a life time mortgage with him.
It's your money so it's tax free.
A lump sum is great but so is the draw down option. Let's say you want a new car this year, a new kitchen next year and a deposit on a property for your kids in 5 years time. You can use the money that's in a "reserve pot" when you need it and only accrue interest on it when you draw it.
You don't even have to use it, just have it as a "What if" pot, a security blanket. Even better, you don't need to make ANY repayments, ever. If you want to you can but you don't have to and no the lender doesn't own your house, nor can they take it from you since you can't default on any repayments.
Getting older is on my radar and in your forties and beyond these life plans are bloody important to get a grip with in my opinion. Awareness is key even if you don't make any decisions for a few years this is the beauty of having a financial advisor on your family team.
There will be tons of questions you'll have for Chris, some of which I already asked him in the video.
What if one partner dies, how does it affect the will, how does it impact on later life long term care?
Essentially he says the loan is repayable on death of the second partner or if they go into long term care. Upon death of both, the loan is repayable but there's up to 12 months for this - interest will continue to accrue however.
The house is usually sold at some stage by the beneficiaries of the will & leftover money goes into the estate.
These are emotional conversations to have in a family but essential.
In May we actually discuss both later life care and wills, probate & inheritance tax so please do stay tuned as the journey continues through our Life Map see below - this is my business vision to cover all aspects in the coming months.
If you're not a social media fan pop your email into the subscribe form at the bottom of the page & I'll let you know what's coming up next & how you can get involved with your own questions - happy to ask them on your behalf.
So if you like what you have seen, read & heard & fancy a chat with Chris
(this doesn't cost anything it's just a chat to find out what your thoughts are) please do message us using the contact us page so we can ensure a smooth (and GDPR compliant) communication process.
It would be lovely for us to become acquainted as we may have some other great options for you in the coming months as we build our agency directory of wonderful people!
referral letter to chris
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