Lending to over-65s

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

In message , Windmill writes

Whoever told you that doesnt know the market. It may ve a particular lender or lenders view but it isnt pan market.

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.

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

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.

Thank you. That's a very powerful argument.

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!

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.

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.

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.

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.

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?

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.

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'.

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?

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!

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

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

So why not pass it to them now?

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.

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

what is the term you would use?

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