Reverse mortgage in UK

Old Feb 13th 2018, 2:35 am
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Default Reverse mortgage in UK

So if a person buys a house for cash and wants to do a reverse mortgage does anyone have any feedback on what the process entails?
I know the pros and cons of a reverse mortgage but have no heirs to leave anything to so thought I would buy up, do a reverse mortgage to release the funds to invest.

Thanks
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Old Feb 13th 2018, 12:38 pm
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Default Re: Reverse mortgage in UK

A couple of links that might help.
Could Home Equity Release (Lifetime Mortgage) Be The Best Way To Fund Your Retirement? - The Money Daily

https://www.moneyadviceservice.org.u...equity-release

If you Google it you will find more information.
One drawback is if the debt mounts and you live for longer than expected, the debt may exceed the property value.
HTH
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Old Feb 13th 2018, 2:49 pm
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Default Re: Reverse mortgage in UK

Reverse Mortgage is usually called Equity Release in Britain. It is debt and involves usury. TV ads do not explain that !
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Old Feb 13th 2018, 5:33 pm
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Default Re: Reverse mortgage in UK

Thanks for that info, very useful.
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Old Feb 13th 2018, 5:36 pm
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Default Re: Reverse mortgage in UK

Originally Posted by Benson55
So if a person buys a house for cash and wants to do a reverse mortgage does anyone have any feedback on what the process entails?
I know the pros and cons of a reverse mortgage but have no heirs to leave anything to so thought I would buy up, do a reverse mortgage to release the funds to invest.

Thanks
Can you elaborate a bit on your plan? What type of income are you seeking from a reverse mortgage - a lump sum or smaller amounts over time?

Are you wanting to invest any equity released into more property, or will you need this for living expenses?

A reverse mortgage/equity release is a huge decision, if you can give a bit more info that would be great (only if you want to of course!)
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Old Feb 13th 2018, 5:41 pm
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Default Re: Reverse mortgage in UK

Hi the idea was to invest the monies from the reverse mortgage in an annuity or some such device for a monthly income to live off, as part of the income portfolio.

As I have no one to leave anything to it really does not matter if I live 1 year after or 25 years after as I believe one can not be evicted from the property while alive.

I know there are 'set up' fees and the debt does increase over time but that is all part of the process.
I was really interested in hearing from anyone who has actually done the procedure and what their experience was like. I believe Aviva is the largest company in the UK carrying equity release out and their site does explain it in detail but there is nothing to compare with the actual experience of doing it.

Thanks
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Old Feb 13th 2018, 6:55 pm
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Default Re: Reverse mortgage in UK

Originally Posted by Benson55
Hi the idea was to invest the monies from the reverse mortgage in an annuity or some such device for a monthly income to live off, as part of the income portfolio.

As I have no one to leave anything to it really does not matter if I live 1 year after or 25 years after as I believe one can not be evicted from the property while alive.

I know there are 'set up' fees and the debt does increase over time but that is all part of the process.
I was really interested in hearing from anyone who has actually done the procedure and what their experience was like. I believe Aviva is the largest company in the UK carrying equity release out and their site does explain it in detail but there is nothing to compare with the actual experience of doing it.

Thanks
Thanks for giving some more info. I was just wondering why you wouldn't invest the cash in another way to get an income, whether that be an annuity or perhaps a buy to let property, or if you were just after a lump sum and a property to live in why you wouldn't just remortgage the house you'd paid cash for. I don't have any personal experience of your plans, sorry.

If possible, try to get some independent advice to go through the figures as I wouldn't be relying on advice from a lender, they're in it for them, not for you. Your age will determine the amount of equity that can be released, the older you are the higher amount you can release as it's less risk for the lender. The highest percentage of a property's value that a lender will release on an equity mortgage is typically 60%. Best of luck.

Edit: this link may assist a bit. https://www.moneyadviceservice.org.u...y-release-help

Last edited by spouse of scouse; Feb 13th 2018 at 7:00 pm.
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Old Feb 16th 2018, 1:06 pm
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Default Re: Reverse mortgage in UK

This week’s episode of BBC Money Box is all about Equity Release. You can catch it the BBC radio iPlayer or as a podcast. Well worth a listen.
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Old Feb 18th 2018, 5:42 pm
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Default Re: Reverse mortgage in UK

Annuities are not necessarily the best option.
They can offer really quite low returns but it does no harm to get a quote.
The answer depends on how much you have to invest.
If you have say £100k to invest in a moderate risk fund then you would expect it to grow about 5% to 7% on average a year.
If you withdraw 5% pa then you would get a tax-free income of £5k pa with a modest amount of tax produced by the fund due to interest and dividends.
If you have more savings than that then just multiply the figures.
I would expect annuities to return lower figures that those.
In addition the fund would pay perhaps 1% in management fees.
HTH
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Old May 15th 2018, 8:37 pm
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Default Re: Reverse mortgage in UK

We too are looking to do the reverse mortgage thing as like you, we have no one to leave it to, we have uk pension, USA pension and private pension, not huge amounts but more than enough to live off, we recon we can get about £190K

dont really care about a return, just going to put in a building society, it’s there as our play and travel fund so we don’t draw from our regular monthly income
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Old May 15th 2018, 8:52 pm
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Default Re: Reverse mortgage in UK

The term they use in the UK is "Equity Release", which is a figure of speech designed to disguise the fact that it is in fact a loan. The lender lets you have some money - at interest - which will be repaid from the sale of the house after your death.

I think the expression "reverse mortgage" is more honest !
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Old May 15th 2018, 11:25 pm
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Default Re: Reverse mortgage in UK

Take a look at this link:

Aldermore offers lifeline mortgage to pensioners with interest-only debt | This is Money

seems they offer up to 60% for older people who want to pay only interest up to age 99, and you can use the house sale to pay the capital off.
Aldermore have a website but its basic as they only do these schemes through brokers.

As for the returnwhy not buy some dividend paying stocks like Royal Dutch Shell who pay 4.5% right now, or BP the same, or one of many dividend paying stocks in order to pay the interest off.
Investment trusts range from paying 1% to 20%, but of course the higher the % the more risky. Open a trading account and buy them yourself and when you want funds take the dividend monies or cash in some shares.

Be careful of Investment 'advisors' unless you know and trust one as they are usually after their fees, I have been caught out a couple of times with dud 'advise', never again.
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Old May 15th 2018, 11:31 pm
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Default Re: Reverse mortgage in UK

Thanks, before I moved to USA , I worked in the finance mortgage industry, have a number of trusted options, honestly in our situation it’s daft just to leave the money in the house as government will just mop it up after we’re gone
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Old May 16th 2018, 9:13 am
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Default Re: Reverse mortgage in UK

Originally Posted by Benson55
Take a look at this link:

Aldermore offers lifeline mortgage to pensioners with interest-only debt This is Money

seems they offer up to 60% for older people who want to pay only interest up to age 99, and you can use the house sale to pay the capital off.
Aldermore have a website but its basic as they only do these schemes through brokers.

As for the returnwhy not buy some dividend paying stocks like Royal Dutch Shell who pay 4.5% right now, or BP the same, or one of many dividend paying stocks in order to pay the interest off.
Investment trusts range from paying 1% to 20%, but of course the higher the % the more risky. Open a trading account and buy them yourself and when you want funds take the dividend monies or cash in some shares.

Be careful of Investment 'advisors' unless you know and trust one as they are usually after their fees, I have been caught out a couple of times with dud 'advise', never again.
In the UK, you can invest in a portfolio which you manage yourself for minimum fee outlay.
Normally, the company offers preferred funds for investment and gives the recent performance figures for each.
You then choose which funds to invest in and how much you put in each fund.
If you diversify your investments over many (20+) funds then the risk is spread thinly over the whole portfolio.
I recently looked at one investment house and the preferred funds had performed at 10%+ per year over a 5 year period.
You are in complete control of your portfolio.
If you have a large enough investment then you may have free access to an adviser but you probably need to invest £250k to get this.
I am talking about very large organisations and the one I referred to about is a global investment house.
HTH
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Old May 16th 2018, 6:54 pm
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Default Re: Reverse mortgage in UK

Yes u r right the capital outlay is high for the advisor services and really they are not encouraging when it comes to moving away from bonds and very safe investments. I have spoken to a few and that has been the case.
In my opinion its better to manage your own portfolio then you have no one blame when it goes wrong and also you decide the real risk.
Certainly going over a lot of equities or funds is always the best plan as when one crashes your exposure is minimal.
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