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Finances / Finanzen » uk.finance » Lending to over-65s
Lending to over-65s [message #375844] Mi, 29 März 2006 17:17
spam-no-spam  
Can anyone suggest a lender for the over-65s?

I've got rental property currently worth about 16 times my total
indebtedness, so even if the doom-and-gloom-sayers were correct a 50%
drop in values wouldn't wipe me out.

The letting market for small flats is quite competitive nowadays,
and there are a lot of expenditures, so I haven't had much luck in
paying off my current loan. The payments are up to date, but I've
really just moved the debt around, whenever I was offered a good rate
of interest somewhere on a small loan.
I.e. I really owe as much as I always did.

Now I'm being told that it isn't policy to make business loans which
can't be repaid before age 70, and it was suggested to me instead that
I could get some kind of 'lifetime mortgage' for a maximum of half my
present total debt, which doesn't seem a very good deal - it would
leave me with payments too high to allow much renovation work, and if I
decided to sell my own little flat and repay the mortgage, there would
be an early repayment penalty which is presumably quite steep (they
recommend against this scheme for those who might repay before they die).

I'm not knowledgeable about financial services (though I can count!) so
any comments would be gratefully received.

Haven't yet scanned the web, but plan to spend a lot of time on that
quite soon. (Time which should really be spent redecorating).


--
Windmill, Use t m i l l
TiltNot [at] Onetel.com [at] O n e t e l
. c o m
Re: Lending to over-65s [message #375852 ] Mi, 29 März 2006 18:12
Tumbleweed  
"Windmill" <spam-no-spam [at] Onetel.net.uk> wrote in message
news:IwwAHw.3Ir [at] freebie.onetel.net.uk...
> Can anyone suggest a lender for the over-65s?
>
> I've got rental property currently worth about 16 times my total
> indebtedness, so even if the doom-and-gloom-sayers were correct a 50%
> drop in values wouldn't wipe me out.
>
> The letting market for small flats is quite competitive nowadays,
> and there are a lot of expenditures, so I haven't had much luck in
> paying off my current loan. The payments are up to date, but I've
> really just moved the debt around, whenever I was offered a good rate
> of interest somewhere on a small loan.
> I.e. I really owe as much as I always did.
>

Why dont you sell one of your current properties and use the money from that
instead?

--
Tumbleweed

email replies not necessary but to contact use;
tumbleweednews at hotmail dot com
Re: Lending to over-65s [message #375882 ] Mi, 29 März 2006 20:40
john boyle  
In message <IwwAHw.3Ir [at] freebie.onetel.net.uk>, Windmill
<spam-no-spam [at] Onetel.net.uk> writes
>Can anyone suggest a lender for the over-65s?
>
>I've got rental property currently worth about 16 times my total
>indebtedness, so even if the doom-and-gloom-sayers were correct a 50%
>drop in values wouldn't wipe me out.
>
>The letting market for small flats is quite competitive nowadays,
>and there are a lot of expenditures, so I haven't had much luck in
>paying off my current loan. The payments are up to date, but I've
>really just moved the debt around, whenever I was offered a good rate
>of interest somewhere on a small loan.
>I.e. I really owe as much as I always did.
>
>Now I'm being told that it isn't policy to make business loans which
>can't be repaid before age 70,

Whoever told you that doesnt know the market. It may ve a particular
lender or lenders view but it isnt pan market.
>and it was suggested to me instead that
>I could get some kind of 'lifetime mortgage' for a maximum of half my
>present total debt, which doesn't seem a very good deal - it would
>leave me with payments too high to allow much renovation work, and if I
>decided to sell my own little flat and repay the mortgage, there would
>be an early repayment penalty which is presumably quite steep (they
>recommend against this scheme for those who might repay before they die).
>
>I'm not knowledgeable about financial services (though I can count!) so
>any comments would be gratefully received.
>
>Haven't yet scanned the web, but plan to spend a lot of time on that
>quite soon. (Time which should really be spent redecorating).
This would be a complete misuse of a lifetime mortgage. dont do it.
Apart from them not lending you enough, the debt compounds alarmingly
and because you dont actually 'pay' any interest (it just compou8nds)
HMR&C wont allow you to offset it against your rent.

Why not just stay with your current lender? Dont even think of paying it
off, let it be.
--
John Boyle
Re: Lending to over-65s [message #375898 ] Mi, 29 März 2006 23:07
tim_in_sweden2005  
"Tumbleweed" <thisaccountneverread [at] yahoo.com> wrote in message
news:48vppdFle587U1 [at] individual.net...
>
> "Windmill" <spam-no-spam [at] Onetel.net.uk> wrote in message
> news:IwwAHw.3Ir [at] freebie.onetel.net.uk...
>> Can anyone suggest a lender for the over-65s?
>>
>> I've got rental property currently worth about 16 times my total
>> indebtedness, so even if the doom-and-gloom-sayers were correct a 50%
>> drop in values wouldn't wipe me out.
>>
>> The letting market for small flats is quite competitive nowadays,
>> and there are a lot of expenditures, so I haven't had much luck in
>> paying off my current loan. The payments are up to date, but I've
>> really just moved the debt around, whenever I was offered a good rate
>> of interest somewhere on a small loan.
>> I.e. I really owe as much as I always did.
>>
>
> Why dont you sell one of your current properties and use the money from
> that instead?

I agree.

OP: What is the purpose of this letting portfolio? Presumably
it's to give a retirement income. Does it really make sense to
have assets making a negative contribution at this point in your
life. Do you really believe that you are going to miss the next
house price boom whilst you are healthy enough to make use of
it? If not, you should liquidate some of it and invest the proceeds
in something less risky.

tim
Re: Lending to over-65s [message #375926 ] Do, 30 März 2006 06:35
spam-no-spam  
"Tumbleweed" <thisaccountneverread [at] yahoo.com> writes:

>Why dont you sell one of your current properties and use the money from that
>instead?

If money was worth anything, that would make sense.
But if I'd done this in the 1980s, as one lawyer suggested/urged, I
would have got 7,500 which would probably be long gone with little to
show for it.
--
Windmill, Really t m i l l
TiltNot [at] Onetel.com [at] O n e t e l
. n e t
. u k
Re: Lending to over-65s [message #375927 ] Do, 30 März 2006 06:46
spam-no-spam  
john boyle <john [at] johnboyle1.demon.co.uk> writes:

>This would be a complete misuse of a lifetime mortgage. dont do it.
>Apart from them not lending you enough, the debt compounds alarmingly
>and because you dont actually 'pay' any interest (it just compou8nds)

>HMR&C wont allow you to offset it against your rent.

Thank you. That's a very powerful argument.

>Why not just stay with your current lender? Dont even think of paying it
>off, let it be.

Trouble is, the monthly payments (a business loan) are set at a level
which will pay off the loan by age 70, and those current payments are
too high when I'm faced with vacancies, renovation requirements etc.

Something closer to interest-only is what I need right now.

BTW the 'lifetime mortgage' suggestion came from the business loan
lender!

--
Windmill, Really t m i l l
TiltNot [at] Onetel.com [at] O n e t e l
. n e t
. u k
Re: Lending to over-65s [message #375928 ] Do, 30 März 2006 07:07
spam-no-spam  
"tim \(in sweden\)" <tim_in_sweden2005 [at] yahoo.co.uk> writes:


>OP: What is the purpose of this letting portfolio? Presumably
>it's to give a retirement income.

More a matter of leaving something to my daughters. Of course I need a
minimal income, but not a lot.

I've done a lot of things, been a lot of places, and can't really
expect to continue the sort of lifestyle I once enjoyed unless I behave
in a way I'd consider irresponsible.

Others might well feel differently, though I doubt if many are really
'spending their childrens' inheritance' as some boast.

>Does it really make sense to
>have assets making a negative contribution at this point in your
>life.

Money seems to be a wasting asset. In about 1945 my parents sold a flat
for 750 which would be worth at least 150,000 today. So I don't want
money in the bank, though the banks probably like the idea.

>Do you really believe that you are going to miss the next
>house price boom whilst you are healthy enough to make use of
>it?

Don't want to make use of it, and if I stop being at least reasonably
healthy I suppose it'll be time to die.

>If not, you should liquidate some of it and invest the proceeds
>in something less risky.

Depends how you define 'risk', I suppose. In one sense gold might be
less risky, but I doubt if anyone who held gold for the last 60 years
would feel that it had been a good investment. There's a risk of loss
of value.

I could of course sell and give all the money to my children, who could
probably make use of it to pay off their mortgages and business
loans. That might count as good use of the cash. but it would leave me
uncomfortably tight.

--
Windmill, Really t m i l l
TiltNot [at] Onetel.com [at] O n e t e l
. n e t
. u k
Re: Lending to over-65s [message #375931 ] Do, 30 März 2006 08:59
Tumbleweed  
"Windmill" <spam-no-spam [at] Onetel.net.uk> wrote in message
news:IwxBFz.4F [at] Millstream.onetel.net.uk...
> "Tumbleweed" <thisaccountneverread [at] yahoo.com> writes:
>
>>Why dont you sell one of your current properties and use the money from
>>that >>instead?
>
> If money was worth anything, that would make sense.
> But if I'd done this in the 1980s, as one lawyer suggested/urged, I
> would have got 7,500 which would probably be long gone with little to
> show for it.

This isnt the 1980's, and you are 30 years closer to a time when you wont
need any of that money, ever again. You are complaining about the
properties barely paying for themselves, which means you arent bringing any
money in, what would you pay the loan with?

--
Tumbleweed

email replies not necessary but to contact use;
tumbleweednews at hotmail dot com
Re: Lending to over-65s [message #376123 ] Sa, 01 April 2006 22:50
spam-no-spam  
"Tumbleweed" <thisaccountneverread [at] yahoo.com> writes:

>This isnt the 1980's, and you are 30 years closer to a time when you
>wont need any of that money, ever again.

Our children are the only slight claim to immortality any of us have
(unless you believe in some of the pie-in-the-sky ideas), and they will
certainly need the money.
Or would be able to make good use of it, at least.

>You are complaining about the properties barely paying for themselves

Not sure what I said to give that impression. In fact they have
provided me with a small income (usually) and considerable capital
appreciation. About which I am pleased.

My original question wasn't meant to be 'should I borrow', it was
'where can I borrow'.

>which means you arent bringing any money in, what would you pay the
>loan with?

With the money which is usually (not always) brought in. Or of course
by the sale of a flat when I die.

Someone referred to the property as 'a portfolio'. Much too grand a
term, IMHO. Just a few tiny flats.
But not negligible, either.

Why so keen to have me sell?


>--
>Tumbleweed

>email replies not necessary but to contact use;
>tumbleweednews at hotmail dot com


--
Windmill, Really t m i l l
TiltNot [at] Onetel.com [at] O n e t e l
. n e t
. u k
Re: Lending to over-65s [message #376127 ] So, 02 April 2006 12:19
Tumbleweed  
"Windmill" <spam-no-spam [at] Onetel.net.uk> wrote in message
news:Ix29w1.BCL [at] Millstream.onetel.net.uk...
> "Tumbleweed" <thisaccountneverread [at] yahoo.com> writes:
>
>>You are complaining about the properties barely paying for themselves
>
> Not sure what I said to give that impression. In fact they have
> provided me with a small income (usually) and considerable capital
> appreciation. About which I am pleased.

Here's what gave that impression; "The letting market for small flats is
quite competitive nowadays, and there are a lot of expenditures, so I
haven't had much luck in paying off my current loan".

Well, there is not much luck involved, its a matter of simple maths and if
the maths isnt working now I'm not sure why you think borrowing more would
help, you'll be even less able to pay off the loans!

>
> My original question wasn't meant to be 'should I borrow', it was
> 'where can I borrow'.
>
>>which means you arent bringing any money in, what would you pay the
>>loan with?
>
> With the money which is usually (not always) brought in. Or of course
> by the sale of a flat when I die.

When it will more likely be affected by IHT, potentially diminishing the
amount brought in significantly.

>
> Someone referred to the property as 'a portfolio'. Much too grand a
> term, IMHO. Just a few tiny flats.
> But not negligible, either.
>
> Why so keen to have me sell?

Because by your own words the properties are barely paying for themselves
(or you'd be paying the loan off) therefore, selling one of them, to release
capital, sounds like a good idea on many fronts;
Effectively cheaper loan rate since you are borrowing from yourself.
House prices arent rising as they did in the past.
Flat rents are not increasing (as implied by you) so in the short to medium
term, a better bet to sell now.
Longer term, if you are thinking about passing money on to your kids, do
some of it now to minimise IHT.
Get rid of a higher cost loan.

In summary, the 'keeness' comes from the conditions you outlined, no hidden
agenda.

If you just wanted to borrow some money, then you needent have given the
background about flats, children, rental income dropping etc etc, since by
giving it you effectively ask people to take that into consideration. If
you'd said you were a llama farmer and the herd was barely covering its own
costs and you needed some money the advice would have been the same, sell
some llamas. If thats not in consideration for whatever reason, dont mention
the llamas in the first place

--
Tumbleweed

email replies not necessary but to contact use;
tumbleweednews at hotmail dot com
Re: Lending to over-65s [message #376137 ] So, 02 April 2006 15:39
tim_in_sweden2005  
"Windmill" <spam-no-spam [at] Onetel.net.uk> wrote in message
news:Ix29w1.BCL [at] Millstream.onetel.net.uk...
> "Tumbleweed" <thisaccountneverread [at] yahoo.com> writes:
>
>>This isnt the 1980's, and you are 30 years closer to a time when you
>>wont need any of that money, ever again.
>
> Our children are the only slight claim to immortality any of us have
> (unless you believe in some of the pie-in-the-sky ideas), and they will
> certainly need the money.

So why not pass it to them now?

> Or would be able to make good use of it, at least.
>
>>You are complaining about the properties barely paying for themselves
>
> Not sure what I said to give that impression. In fact they have
> provided me with a small income (usually) and considerable capital
> appreciation. About which I am pleased.

The point is that most people (including yourself it would seem)
do not think that this capital increase will be sustained.

Surely it is better to lock in (at least some of) what you have
now and move it to an investment with no downside risk.

>
> My original question wasn't meant to be 'should I borrow', it was
> 'where can I borrow'.
>
>>which means you arent bringing any money in, what would you pay the
>>loan with?
>
> With the money which is usually (not always) brought in. Or of course
> by the sale of a flat when I die.
>
> Someone referred to the property as 'a portfolio'. Much too grand a
> term, IMHO. Just a few tiny flats.

I don't agree (that it is the wrong term).

what is the term you would use?

> But not negligible, either.
>
> Why so keen to have me sell?

No-one is keen for you to sell. They are giving you financial
advice. One of the rules of which concerns eggs and
baskets.

HTH

tim
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