Lifetime Mortgages
A lifetime mortgage can provide you with a cash lump sum, an additional income, or both.
- There are no monthly repayments
- Interest rates are fixed
- You will still own your home
With our FREE information pack you can discover whether a Lifetime Mortgage is the correct option for you.
Lifetime Mortgages
A Lifetime Mortgage is where a loan is taken against your property to provide you with a cash lump sum, an additional income, or both. You continue to live in your home and do not make any monthly repayments. Instead the interest is added on to the initial loan amount and is repaid only when your property is sold or on your death. If it is a joint application then it is repaid after the last survivor dies or decides to sell for whatever reason. When your property is sold, the initial loan and accrued interest are repaid to the lender and the balance goes to you or your estate.
A popular variation on a lifetime mortgage scheme offers a draw down facility. The lender will agree the maximum amount that you can borrow (£50,000 for example). You may only need to take a smaller sum initially (lets say £10,000). Additional funds are then available in the future so that you only draw what you need (subject to a minimum and maximum amount), so lets say you take a further £6,000 three years later. The advantage with this is that interest is only charged on what you have actually borrowed (£16,000) rather than the total loan facility (£50,000).
This is a lifetime mortgage. To understand the features and risks, please ask for a personalised illustration.
Advantages of a Lifetime Mortgage
- You do not have to make any monthly repayments.
- The money released can be taken as a tax free lump sum or to generate an additional income (which would be eligible for the appropriate tax).
- Interest rates can be fixed so you will not have to worry about rate increases.
- As you still own your home, you or your estate will benefit from any increase in its value (subject to the repayment of the loan and interest).
- You can repay the loan if you want to (subject to the lenders approval).
- All good scheme providers offer a no negative equity guarantee.
- It may be possible to receive a further advance in the future.
- If your estate is potentially liable to Inheritance Tax, Equity Release could possibly reduce its impact.
- You may be able to protect and guarantee a percentage of your properties value for your heirs.
Alternatively please read about Home Reversion Plans.
Disadvantages of a Lifetime Mortgage
- You cannot guarantee the amount of money that you will leave to your heirs as any protected amount is calculated as a percentage and is dependent on the value at sale.
- As interest accrues, the amount that you owe will increase reasonably quickly, which will reduce the amount available to your estate.
- An early repayment charge may be payable should you wish to repay the loan.
- It cannot be guaranteed that further advances will be available in the future.
- Other types of scheme may allow you to raise more money than a Lifetime Mortgage.
- Your personal circumstances may change in the future and releasing equity may impact on your entitlement to state benefits and may affect the amount of tax you pay.
Discover more about Equity Release with our FREE, no obligation, information pack or call us free on: 0800 030 55 95
Equity Release products are lifetime mortgages and home reversion plans. To understand the features and risks of lifetime mortgages and home reversion plans, ask for a personalised illustration.
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