Mum Myrtle Moreton-Cox is in her seventies and she decided to take out an optional payment lifetime mortgage, where she pays the interest each month on a home loan.
That means the debt stays at the same amount – it doesn’t build up and eat into the value of her property.
She explains: “I wanted to help my two sons with some cash towards the deposit for a property.
“I wanted to do it now while I’m alive and I can enjoy seeing them benefit, rather than them having to wait.
“I liked this product from Legal & General as it means I can pay the interest, so it won’t add up over the years. I’d like there to be some value left in my home.”
Myrtle, from Gloucestershire, took out a lifetime mortgage for £126,000 and she can remain in her home for the rest of her life.
Providing she keeps up the monthly interest payments, the loan will stay at that level and leave a chunk of equity in her bungalow.
Myrtle adds: “The boys are really pleased and this has worked for all of us. I think it’s a good idea to give older people more options with their later life finances. We are all living longer.
“I did look into this a few years ago but the only option then was an equity release plan, but that wasn’t right for me.”
Things to consider before taking on debt later in life
Think longer term – Will you be able to afford to carry on making mortgage interest repayments throughout the rest of your life? If you are still working, a deal may seem easily affordable but what happens when you have to live off just your pension income?
Remember your other half – How would either of you cope financially if something happened to you or your partner? People retiring after April 2016 get a state pension based on their own National Insurance contributions, they don’t get a share of a partner’s pension as used to happen in the past.
Interest rates are low – Ensure you take into account the fact that rates could rise, even if steadily and slowly, over the coming years. You could come off a fixed rate deal and face higher interest repayments.
All debt has to be repaid – Whatever option you may choose, remember that all debt has to be repaid by someone at some stage.