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Raising cash in retirement on the house.

Coming up to retirement very soon and looking at the house (which is paid for) I can see there will be a continuous requirement for money (large amounts) to be spent on maintenance over the forthcoming years. I believe this will be a very commonplace situation in future due to the very poor quality (and hence lifetime) of building materials used since the '60s onwards. To pay for replacement roofs, drives, and double glazed panels out of even a good (Hollow Laugh) pension income would be a burden.

I know there are retirement income plans but these appear to be very poor value for money, not to say risky in some cases, and in any case it would be capital that is required not income.

So to cut to the chase. Is it not possible to take out a simple interest only mortgage at basic rate to be repaid in total when the house is eventually disposed of by our successors.

ISTM that £25k - £40k to spend on maintenance secured against a £300k house would represent a safe investment for a bank and would avoid the financial disruption for someone on a pension income.

I've seen no indication of the Banks being keen on any such idea, but is this just a reflection of how the building societies were originally set up many decades ago ?

There will be a ready market for loans secured against a house at a commercial rate.

So what's the problem ?

Reply to
Derek G.
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Yes, that is one form of Equity release that is available.

Whilst it is better than most of the others it is still problematic.

1) For a mortgage which is to be rolled up and paid for out of the proceeds of the house, rather than paid monthly from continuous income, interest rates are set several points above the norm. 2) Whilst they do allow you to "draw down" tranches of money each year, against the maximum allowed, they require you to take a reasonably big lump sum at a time, say 25K. Unless you actually want that much in one go you are forced to invest some of it (at perhaps 4%) whilst you are paying interest to borrow it at say 8%.

It may be a safe investment, but at a reasonably high administration costs

tim

Reply to
tim....

Your suppositions are reasonable. However, for you to establish to your own satisfaction whether this is possible, why not approach a few lenders and put it to them and see what they say?

Reply to
cryptogram

Interesting post, and along similar lines to something I've been thinking of. Here's my example.

House is worth a bit over 300K, no mortgage, good area. Is there a bank or BS that would lend money in dribs and drabs, say

15K per year ??? If the bank/BS would let you take money up to say 50% of the house's value and I agreed it would be sold on death, or loan+ interest reaching 50%, then that looks like a pretty safe investment for the bank/BS.

I guess you could call this a homebrew equity release scheme cutting out the middle men that offer equity release schemes, eg Aviva.

Fred

Reply to
Fred

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