In recent years, rising property prices and interest rates have made it more difficult to get onto the property ladder. Indeed, according to Uswitch, the
In recent years, rising property prices and interest rates have made it more difficult to get onto the property ladder. Indeed, according to Uswitch, the
A lifetime mortgage is a loan secured against your home that allows you to release tax-free cash from your property without needing to move.
I want to
A lifetime mortgage is a type of equity release. It’s a loan secured against your home that allows you to release tax-free cash without needing to move out.
You can continue to live in and own your own home. Maintain and insure your home. Typically, the mortgage does not need to be repaid until the last borrower dies or moves into permanent care.
Interest will be added to the loan however if it’s affordable for you, this can be repaid as and when you like.
What are the benefits?
You can get a tax-free lump sum and/or smaller, regular payments to supplement your income in retirement, and can continue to live in your home until you die or move into permanent residential care.
You may continue to benefit from any rise in the value of your property. However, you may also end up owing more because of interest charges applied to lifetime mortgages, so your equity may not increase.
You’re still able to move home and the product can be transferred to a new home, but you can only do this if your new property acts as acceptable security to the mortgage provider. If your new property is worth less than the old one, you might have to repay some of the outstanding mortgage. For most products, there is no need for regular repayments.
What are the risks?
It will reduce the value of your estate and the amount that will go to the people named as beneficiaries in your will.
If you decide to repay the product early, for example if you get an unexpected windfall, there could be a substantial early repayment charge. Your adviser should explain this to you when you take out the mortgage.
Equity Release, or Lifetime Mortgages, are a way to unlock the value for your property and turn it into a cash lump sum. You can do this with a number of providers that let you release equity from your home.
You can apply for a lifetime mortgage when you’re 55 or over.
The most common form is a mortgage that isn’t paid off until you die or move into long term care.
If you do have people to pass assets to, equity release generally means there will be less for them to inherit. Equity release products fall into two main types of product:
Later in Life Mortgage
This is the most popular and for those over the age of 55. Here you borrow some of your home’s value at a fixed or capped interest rate (see below for more). With old-style lump-sum lifetime mortgages, you don’t make repayments, so the interest compounds each year as the amount you owe is increasing all the time.
Some ‘drawdown’ versions do allow you to pay back the interest (some even allow you to pay back some of the capital as well) so you can reduce the overall cost. With this type, you can take money out of your property a bit at a time up to an agreed amount – with interest charged on the amount you take, rather than the whole amount available.
Unlike a traditional residential mortgage, affordability is usually based on your age. The older than you are, the higher the amount you may be able to borrow. This can also be affected by any life-limiting illness you may have where a provider may lend you even more due to life expectancy. You’ll need to be over the age of 55 though and if you have any outstanding mortgage balances on your property, they will need to be repaid as part of the equity release.
A Lifetime Mortgage is used to unlock capital from within the property. This can be used to:
Some potential risks include:
Getting started on a later in life mortgage couldn’t be easier. With a quick call and some basic information, we’ll perfectly pair you with an adviser.
Your dedicated lifetime mortgage advisor and case manager will take care of all your paperwork and keep you up to date with your chosen lender, surveyor & solicitor.
Before you know it, you’ll be completing on your lifetime mortgage! You’ll be able to access the equity and discover the endless possibilities.
If your mortgage repayment type has been interest-only, then it could mean you are left with your original loan to pay off at the end of your mortgage term. There is an option to use your funds from a lifetime mortgage to pay off your mortgage.
You may have to pay an early repayment charge to your existing lender if you pay of your mortgage early.
You could use a lifetime mortgage to help fund your family and give them an early inheritance. whether it’s a mortgage deposit for a child or grandchild, or a helping hand with a wedding or uni fees, could you see them enjoy the money in your lifetime with a lifetime mortgage.
In retirement, comfort means different things to different people. Some crave peaceful moments tending to gardens, while others require structural adjustments for growing families. Accessing the capital tied up in your property can make these upgrades possible, ensuring your home suits your evolving needs.
As we age, finances can become tighter, but there are still ways to enjoy a better retirement and take control. With increasing living costs and pensions that may not meet expectations, releasing equity from your property can supplement your retirement income. When investing your capital is at risk.
Nothing eats into retirement savings like monthly repayments on a high interest credit card. ‘Money Helper’ is one organisations that offer free advice to help you tackle debt. They will talk through your situation and discuss your options with you.
Sometimes, we all long for that all exclusive holiday of a lifetime. Which is why when we’re approaching retirement, we look for something unforgettable. One of the most common reasons for using a lifetime mortgage, is to release capital for you to use for your dream holiday.
Find expert guidance, and all the information you need to make informed decisions on your path to homeownership.
UK Mortgage Centre Limited is an Appointed Representative of Refresh Mortgage Network Limited. Refresh Mortgage Network Limited is authorised and regulated by the Financial Conduct Authority. We are entered on the Financial Services Register under firm number 1019794.
As a mortgage is secured against your home, it could be repossessed if you do not keep up the mortgage repayments. The Financial Conduct Authority does not regulate some forms of buy-to-let mortgages.
The Financial Conduct Authority does not regulate will writing and taxation and trust advice.
You may be charged a fee for your advice. A typical fee is £495, which would be payable when you receive your mortgage offer. Your dedicated advisor will discuss this further on your free initial phone call.
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