treasuredr

Hi there,

I came across this today when I was browsing Rightmove.co.uk looking at house prices and trying to see whether retirement in the UK was going to be an option.

http://www.homewise.co.uk/returning-to-the-uk

I'm not sure whether it's a new scheme or been around for a while, but I thought it might be helpful for someone thinking of returning on a retirement budget.

Maltoo

that sounds like a scam to me, similar to the reverse mortgage scam here in the US.

nun

I wouldn't call a reverse mortgage a scam. It might not be the best of ways to access equity in a home, but some people find them useful.

Maltoo

They take advantage of older Americans and probably should be outlawed in my opinion.

Pulaski

Sounds odd for sure, but it is really just a fancy annuity with real estate attached. It works like an annuity purchased with your personal pension/ 401k. You hand over a lump sum, and in return you get some benefit for the duration of your life, which in this case is effectively mortgage payments for life, and there may be a lump sum payout on death or incapacity i.e. when you vacate the property.

The company may be getting much of the benefit of any appreciation in the property value, and the company also likely has life insurance on their client-occupier to fund, at least in part, the equity stake payable on death or permanent incapacity.

My guess is that the fees are relatively high, so it's not a particularly good deal, but it might work for some people.

nun

Exactly. These sort of products are not good investments and I would never buy one myself, but they are useful in some circumstances. There are lots of bad products out there, but they are not scams. I'd put the Homewise product in the same category as things like interest only mortgages.

Maltoo

We are not going to agree on this subject, I think they are legalized scams and you do not, we will have to just agree to disagree.

The majority of people who take advantage of these end up losing the home in the end and it is the family members that suffer. A friends grandfather took out one of these reverse mortgages and upon his death the mortgage company evicted his widow.

Pulaski

I'm sorry for the widow, but honestly, that's your friend's grandfather's fault. He signed the contract, presumably without getting advice from his own lawyer or professional advisor. It is neither fair nor reasonable to outlaw such schemes because a few people don't protect themselves and their family. People need to tread very carefully when signing up for such life-changing contracts, but that doesn't make the contracts inherently wrong.

treasuredr

Thanks for your input guys! I didn't think it was a scam - I thought it was an interesting product that might be useful to some - especially those returning and finding it hard to get back into the UK property market looking for a "last home".

I had a distant relative who took out a reverse mortgage as he wanted to maintain his "standard" of living he had prior to retirement. He was a judge and retired in his late 70's and wanted to maintain his private memberships to several london clubs etc. His wife was allowed to stay in the property after he died until she passed on about 4 years later. However, there was nothing left afterwards and their children got nothing. He knew that though when he signed the contract, so no surprises!

Maltoo

Of course it is, still does not make it right. Like I said we disagree.

dunroving

I once saw a bumper sticker that said, "Get revenge on your kids - spend their inheritance". Must say, I don't understand the modern idea that people should get rich when their parents die.

Reverse mortgages are a good way to implement the principle of "You can't take it with you"

As with all financial products, caveat emptor.

spouse of scouse

Fully agree with your take on inheritance, dunroving! If you're able to comfortably leave your kids some money/assets, then that's great. But the sort of (adult) child who would willingly see their parents struggle during their latter years, just to leave them a chunk of money, don't deserve anything! Reverse mortagages mightn't be the most lucrative way of realising the value of a property but if it works for people in particular circumstances, then good on them.

treasuredr

I agree with that. I was never fortunate enough to have handouts from my parent, not because she didn't want to help but because she was never financially sound enough to help me, knowing that I didn't ever ask!

I've done ok for myself propertywise. I'm not sure however that I owe my children, in terms of them automatically having everything when I've gone. I certainly would look at a reverse mortgage should the situation ever arise that this would be an option. This would more than likely be if I came back to the UK to retire, otherwise renting could be the only other choice. Whilst I can enjoy ample square footage in the US, if I ever went back I would find the type of property I could afford a bit limited.

spouse of scouse

It was good of you to post that link to help other people. My UK cit husband and I are planning to retire to his home city of Liverpool in a couple of years, we're a bit lucky there as housing seems to be far more affordable than in other parts of the UK, such as the south of England. Trouble is, hubby has his heart set on a flat and while I'm fine with that, I need to have some outside space or I'll think I'd go mad (madder). So either a ground floor with access to a garden, preferably private, or an upper story one with a decent sized balcony. And a seperate kitchen. And room to swing more than one cat. And two bathrooms. Oh dear............

treasuredr

Yes you should find better value for money in and around Liverpool. I'm a southerner and if I wanted to return to anywhere south of Watford, there would be absolutely no chance of me finding anything remotely equal to the size of what I have here in the US, and my house isn't big by US standards but for me it's a palace compared what I had in the UK.

Maybe consider some of the lovely older buildings that have been converted to flats, they tend to have more space and lovely high ceilings. Newer properties tend to be much smaller. Good luck with the two bathrooms