nottheaverageactuary

Actuarial news and views from Cape Town and beyond

Lifetime Mortgages design

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After having seen these UK based products, lifetime mortgages in class, they sounded too good to be true. So, I decided to do further research on them. If you don’t remember what lifetime mortgages are, they are schemes where the homeowner takes out a mortgage on their property which is repaid when the borrower dies or is moved into long term care. So here is how they work, you either pay interests charged on your borrowings or they add it into your loan amount and when you die, the beneficiary will sell the house and keep the increase in house value or have to pay the difference if the sale proceeds are enough to cover the mortgage. I think they might be a good product for old couples without dependents, as they will get to spend their property money before they die.

Do you think the lifetime mortgages ( roll-up mortgages, fixed-repayment mortgages and Interest-only mortgages) are profitable, given how they work? Are they inline with customer needs and interests of UK citizens? How strict do you think the underwriting process is?

Find more about Lifetime mortgages on:

https://www.moneyadviceservice.org.uk/en/articles/lifetime-mortgage

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