A lifetime mortgage is a way for older homeowners to access some of the money (the equity) that is within the value of their home. It can also be used to help purchase that property that has always been longed for.
In recent years, we have seen significant and innovative changes in the features offered through these schemes - whether that be flexibility in capital released, ability to service the interest applied and/or inheritance protection solutions. Call us today for a no obligation discussion, where you can find out if equity could work for you.
The Equity Release Council
We are members of the Equity Release Council. The Equity Release Council is the industry body for the UK equity release sector; representing the providers, qualified financial advisers, solicitors and intermediaries. The Council’s aims and objectives are centred on sustaining and growing this safe and innovative market, whilst ensuring continued focus is on positive outcomes for the consumer. They aim to provide unbiased information, educating the consumer, influencing policy and positioning equity release as a true and relevant mainstream option in the ‘At and In’ retirement phases of our economic infrastructure.
Earners of this badge have completed The London Institute of Banking & Finance Accredited Later Life Lending CPD programme. The CPD programme is designed to maintain and raise the learner’s standard and their knowledge of equity release and later life lending. It will also provide them with the skills needed to provide high quality advice to their clients.
Lifetime Mortgages
A lifetime mortgage is the most common type of equity release scheme and is usually secured against your main residence. This is a mortgage designed to run for the lifetime of the homeowner, whereby the property remains 100% owned by you.
Unlike traditional mortgages, there are typically no month-to-month repayments to make, but most plans now have the facility to make voluntary repayments to help control the mortgage balance, if needed. There are many other flexible options which can be included with lifetime mortgages which are designed to provide additional security and reassurance.
No Negative Equity Guarantee
We only recommend regulated equity release products that come with no negative equity guarantees. This means that when your beneficiaries repay your plan, they will never be told to repay more than the value of your property and therefore never be out of pocket.
Drawdown, Income or
Lump Sum
Lifetime mortgages are the most popular type of equity release plan and can be taken out either as a single lump sum, a regular income or via ‘drawdown’.
A lump sum may be right for you if you have a significant one-off expense, such as repaying an interest-only mortgage or major home improvements.
If you need additional revenue to cover your monthly outgoings, then a fixed income lifetime mortgage could help.
However, if you only need a small initial amount of money now and smaller amounts in the future, then a drawdown plan could be the better option. This is because you only pay interest on the amount borrowed.
Interest Rates
Lifetime mortgages work differently from traditional mortgages and thus the interest rates do tend to be higher, however, the majority do provide the security of a fixed rate for life.
Interest is ‘rolled up’ (compounded) and accrues over the lifetime of the loan. Many plans now allow you to make flexible, voluntary payments back to the lender, however there is no obligation to do so.
The amount borrowed, and the interest are typically repaid when the plan ends (i.e. when you die or go into long-term care).
Inheritance
Because lifetime mortgages reduce the value of your estate, it could mean a reduced inheritance for your loved ones. That said, it is now possible to add an inheritance protection guarantee to some lifetime mortgages to provide that peace of mind.
Inheritance protection can ensure that even after taking a release of equity, you can guarantee that some equity in your property can be passed to your chosen heirs.
THIS IS A LIFETIME MORTGAGE. TO UNDERSTAND THE FEATURES AND RISKS, ASK FOR A PERSONALISED ILLUSTRATION. HOME REVERSION PLANS WILL BE BY REFERRAL ONLY.
