Lifetime Mortgage
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A Lifetime Mortgage is a form of Equity Release that gives you access to equity that has built up in your home. Lifetime mortgages are the most popular type of equity release because they are extremely flexible and allow you to retain 100% ownership of your property.
What is a Lifetime Mortgage?
A lifetime mortgage is essentially a long-term loan secured on your property. With a lifetime mortgage, you won’t be required to make any repayments before the end of your plan. As a lifetime mortgage is a type of equity release, it allows you to unlock tax-free cash from the value of your home, without you having to move out. So you can remain a homeowner and still own 100% of your property once you’ve released its equity and not have to make monthly repayments.
Lifetime mortgages also come with a no negative equity guarantee, ensuring that you never pay back more than what your property is sold for, as long as it’s the best price, reasonably obtainable.
Is a Lifetime Mortgage For Me?
During your hard-earned retirement following a lifetime of hard work, you want your lifestyle to be as comfortable as possible and a lifetime mortgage can provide you with just that. A lifetime mortgage is designed to help homeowners aged 55 and over raise funds to pay for whatever matters the most in life.
A lifetime mortgage can help meet your day-to-day living costs and provide you with a more comfortable lifestyle. It can even be a way of funding your future plans, too. Whatever you choose to do with the money, a lifetime mortgage allows you to use the value of your home to live your life your way.
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How Much Can I Borrow?
The amount you can borrow depends on your age and the value of your property. You can choose to release a single lump sum or you have the option to release a smaller lump sum and set up a reserve to borrow additional sums from in the future.
Unlike a standard residential mortgage, you don’t make any monthly repayments. Instead, interest builds upon the loan each year and is charged on the total of the original loan amount, and any interest previously added, which increases the amount you owe.
The loan and interest are repaid in full, usually from the sale of your home, when you (and your partner, for a joint lifetime mortgage) die or go into long-term care, subject to terms and conditions.
Advantages of a Life Mortgage
With a lifetime mortgage, you can get full control back of your debt. No matter how much you choose to release with a Lifetime Mortgage, you will never owe more than the value of your property and you can never pass on any debt to your estate with these plans. If you want to move and not repay the money, you can transfer your plan to another suitable property.
Lifetime mortgages provide you with flexibility, as there are plans available where you can take as little as £10,000 tax-free and leave more funds in the reserve for when you need it.
Different Types of Lifetime Mortgage
There are three main types of Lifetime Mortgage:
Roll-Up Lifetime Mortgage
With a Roll-Up Lifetime Mortgage, you will receive a cash lump and there are no monthly repayments to make, interest will accrue on the amount of cash you choose to release. The interest and lump sum amount will be paid off when the last homeowner on the deeds dies or moves into permanent long-term care.
Drawdown Lifetime Mortgage
A Drawdown Lifetime Mortgage works the same as a roll-up lifetime mortgage except you have more freedom to choose to release the funds, as and when you need it. You can choose to have money in a reserve account ready to draw down when you need it most. A good thing about a drawdown lifetime mortgage is that the interest will not accrue on the money held in the reserve until you have released it, allowing you to minimise the interest charged, whilst having the safety of a cash reserve.
Flexible Lifetime Mortgage
A Flexible Lifetime Mortgage is a type of plan which allows you to make voluntary payments towards the mortgage. Some of these plans have monthly interest payment options. However, if you decide that you don’t want to make any payments at all, you don’t have to. As with the roll-up and drawdown lifetime mortgage, you will still receive a lump sum and maintain 100% homeownership.
You can get flexible lifetime mortgage plans with variable and fixed interest rates. With a fixed rate you can see exactly what you are being charged, whilst a variable rate plan may offer an initial lower rate.
With all lifetime mortgages no matter how much equity you take out, you will never owe more than the value of your property and you can never pass on any debt to your estate.
Lifetime Mortgages Provide a Tax-Free Lump Sum
The money you release from your property is tax-free and can be used to spend however you want. You could use it to fund those home improvements that you’ve always wanted to carry out, clear your debt or take a much deserved holiday.
The only thing to consider with a lifetime mortgage is that any existing mortgage or secured loans against your property must be paid upon completion of the plan. This can be with the funds you have released or any other savings you have.
Want to find out how much you could borrow?
If you want to find out how much you could borrow with a lifetime mortgage or to find out if you are eligible, give us a call today and we will help guide you in the right direction.
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Step 1
Complete an enquiry form and an advisor will call you back.
Step 2
Send us the documents we need.
Step 3
Receive a Decision in Principle from one of our lending panel.
