Get a Lifetime Mortgage or Not?
Getting a lifetime mortgage is a decision that you will have to live with for the rest of your life. It can be an exciting prospect, but it also comes with many risks and potential pitfalls. We will look at some of the pros and cons of getting a lifetime mortgage so you can make an informed decision about whether or not this is right for you, and also, we will going over equity release and what this means for you.
One of the biggest advantages to getting a lifetime mortgage is that it provides you with income for life. This can be extremely valuable if your other assets have not generated enough income over time or have been depleted due to inflation. However, this benefit comes at a price – as the owner of a lifetime mortgage, you are responsible for all renovations and repairs on the property.
If these costs exceed what was anticipated when buying the home then there’s no guarantee that you will recoup those funds through rent payments or by selling off any part of the house in question. Another downside is that despite being obligated to pay monthly fees while still alive, after death some portion of remaining interest may go unpaid unless otherwise specified in your contract (i.e., leaving the mortgage to children or grandchildren).
Your home is one of your most valuable assets, and taking out a lifetime mortgage can put it at risk. While you may have plenty of income now, what will happen in the future? What if inflation skyrockets beyond belief over the course of 30 years? What about unexpected expenses such as repairs that cost more than originally estimated? If these things do occur then you could be forced into foreclosure despite paying for decades. Depending on how far along you are with this type of loan, it might make sense to sell off part of your house (i.e., rental units or rooms) so that there’s something left when all is said and done.