I often see on social media the “advice” not to take a Lifetime Mortgage, just downsize and keep the money left over. How practical is this as a proposition?
As someone who recently moved from my family home of the previous 28 years, it’s not that simple. Most people want to stay in their home and recent surveys suggest that most homeowners over the age of 45 regard their house as their forever home.
Practically if you downsize there will be costs, monetary and psychological. It took us 18 months to declutter so we only took what we wanted to our new home. I spent a year with a paintbrush decorating to brighten up the house. There were some hard improvements that needed to be made for security and insulation and that was before the estate agent was called! All these costs were not expected and of course would need to be met from savings or income.
Let’s look at the transaction costs of moving. Yes you would usually need an estate agent and most will charge a percentage of the sale price as their fee. Then you’ll need a solicitor to do the conveyancing on two houses, the one being sold and the one being bought. If you’re taking another regular type of mortgage the lender will want the property valued at your cost and it would be a good idea to appoint your own surveyor to provide a more detailed condition report. The lender might also charge an arrangement fee and will of course assess your ability to afford to make payments. If you’re lucky enough to move forward without a mortgage then an arrangement fee and “valuation” would not be needed.
Check out our previous article here.