What is a Lifetime Mortgage?
Lifetime Mortgage is a generic term for a loan with an indefinite period. It can be for a new house purchase or if the property is already owned, capital raising is referred to as equity release.
What is Equity Release?
The Money Advice Service provides an explanation of equity release and the range of products that let those over the age of 55 unlock the equity tied up in their home.
Many choose to release capital so that they can free themselves from debt, help loved ones with a house deposit or provide funds for their grandchildren’s education. Others make improvements to their home to make retirement more enjoyable or take a trip of a lifetime.
Whatever your reason is or if you just want to explore the possibilities our team will help you navigate the equity release options.
A free initial Lifetime Mortgage consultation
Independent impartial advice – our advisers are qualified, experienced and impartial. They’ll get to know you, your individual circumstances and aims.
Before your consultation consider whether you may want to move or downsize or if you want to ring-fence some capital for your family to inherit. This will help your adviser make sure any recommended plans will meet your needs in the future.
Some reasons our clients have chosen equity release:
Since the bad press coverage of the 1980s things have changed for the equity release market but the mud still sticks and discourages many from considering this option. Since 2004 the equity release market has been fully regulated and consumers protected. The industry’s own regulator, the Equity Release Council, lead by setting high standards of conduct and practise and have consumer safeguards at heart.
Although not suitable for everyone, aged 55 and over, if you are considering this as a solution for your own circumstances we thought it may be useful to lay to rest some of the common myths that continue to surround the equity release market.
Please bear in mind that no reputable provider will arrange a lifetime mortgage for you without advice from a suitably qualified financial adviser. This ensures that you understand all the features, risks and choose a plan that is right for you.
Yes you will. You will continue to own your property as a lifetime mortgage does not affect the ownership of your home. You are not selling you are just borrowing money against its value. The money borrowed plus accrued interest will be repaid when the house is sold after you die or move into permanent long-term care.
No. All members of the Equity Release Council offer a ‘No Negative Equity Guarantee’. This means that no matter how long the interest accrues the amount owing will never exceed the value of the property the plan is linked to.
Once the loan and accrued interest has been repaid, any remaining funds will be paid to you or your beneficiaries. In the unlikely event that the property sells for less than the amount of the loan, the remaining balance will be written off.
No you won’t. With a lifetime mortgage the capital borrowed, plus the accruing interest roll up and are repaid on your death or when you move into care, so there are no monthly repayments to be made.
However, some products now allow you to meet some or all of the monthly interest cost meaning you can stop the loan balance increasing. It may also be possible for you to pay back a percentage of the loan each year, helping reduce the interest and capital owing. Your financial adviser will be able to source the plan which is most suitable for all your requirements.
By taking a portion of your equity now there will be less available later and your estate value will be reduced. Providing a legacy for future generations may be important to you. If you want to ensure that there is something left you can ringfence some of the value of your home. Your financial adviser will be able to make appropriate recommendations should this be the case.
However, many people chose to use the capital released to provide their loved ones with an early inheritance – they get the added benefit of being around to see the benefit of this legacy in action.
No you won’t. The money taken out of a property with a lifetime mortgage is tax free.
Yes you will. How you decide to spend the released capital is entirely up to you. You could use the funds to pay off existing debts, gift a sum to other family members, take a holiday of a lifetime, make improvements to your home or just supplement your regular income – it’s up to you.
Yes you will. Most lenders allow you to transfer your current loan and product to another property providing it meets their lending terms.
Please Note: Equity Release may impact the size of your estate and it could affect your entitlement to future means tested benefits.