What is a Lifetime Mortgage?
Lifetime mortgages (often known as Equity Release mortgages) are a popular means for homeowners over 55 years of age to unlock some of the value in their homes. Thousands of people in the UK already choose this method to supplement their retirement income/fund home improvements/repay their existing mortgage.
This type of mortgage is a way of borrowing an amount of money against the value of your home, in the form of a long-term loan, and without the need to move. You continue to own your home for the duration of the Lifetime mortgage and the loan can remain outstanding for as long the property remains your residence. You will also be responsible for keeping your property in good repair.
The key to the Lifetime Mortgage, and unlike a ‘standard’ residential mortgage, is that no monthly mortgage payments are payable to the lender at all. Instead, the interest payments are rolled up against the mortgage debt. The loan is ultimately paid back using the proceeds from the eventual sale of your property. This is usually when you die or have moved into permanent long-term care. The remaining equity in your property then passes to your estate.
The amount that you are able to borrow is geared against the value of your home and your age. The older you are, the higher percentage of the property value can be borrowed. The money released can be used for whatever you wish (so long as any outstanding current mortgage has been paid off. The monies can be utilised to repay your existing mortgage) you should be aware that taking out a lifetime mortgage could reduce your eligibility to means-tested benefits and could affect your tax position.
Also, as the interest is added to the loan, there may be no value left in your home at the end of the plan. The providers that we would recommend would normally be members of the Equity Release Council where you can expect a ‘No Negative Equity’ guarantee to be included in the arrangement. Taking out a lifetime mortgage may also reduce the options that you have for moving or selling your home. You should talk to us as your Financial Adviser and your solicitor about this.
We will always discuss your personal requirements and run through all the features and risks as well as discussing your personalised illustration.
A Lifetime Mortgage will reduce the value of your estate, will not be suitable for everyone and may affect your entitlement to state benefits.
This is the most popular way of releasing equity from your home without the need to prove income.
To understand the features and risks, ask for a personalised illustration.
Check that this mortgage will meet your needs if you want to move or sell your home or you want your family to inherit it. If you are in any doubt, seek independent advice.
There may be a fee for the mortgage advice. The precise amount will depend upon your circumstances.
If you are interested in any of the Lifetime Mortgages or any of the other services we offer, please get in touch through the information box below or give us a call on 020 7328 3280
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