As with a conventional mortgage, a lifetime mortgage is when you borrow money secured against your home. The home still belongs to you. Interest is charged on what you have borrowed, which you either pay or, more typically, is added on to the total loan amount. When you die or move out, the home is sold and the money from the sale is used to pay off the loan. Anything left goes to your beneficiaries.
You may be worried that if there is not enough money left from the sale to pay off the loan, your beneficiaries would have to repay any extra above the value of your home from your estate. However, we only recommend lifetime mortgages that offer a no-negative-equity guarantee. With this guarantee the lender promises that you (or your beneficiaries) will never have to pay back more than the value of your home – even if the debt has become larger than this.
There are different types with different costs. You can choose from:
When taking out a lifetime mortgage, you can choose to borrow a lump sum at the start or an initial lower loan amount with the option of a drawdown facility. The flexible or drawdown facility is suitable if you want to take regular or occasional small amounts, perhaps to top up your income, rather than one big loan, as it means you only pay interest on the money you actually need.
It depends on your age and circumstances. Here are some factors to consider.
These aspects will all be covered in our discussions with you and in our eventual written recommendation. This kind of arrangement can be very useful, but it is not appropriate for everyone. By getting to know you and your circumstances well, we will be able to make a recommendation that is appropriate to your needs.
Lenders will expect you to keep your home in good condition. You may need to set aside some money to do this. If this could be a problem, an equity release scheme may not be suitable for you.
We will make sure you are aware of all the costs before you make any commitment. You will usually have to pay:
This is an area where good advice is essential and can help you to make a decision which meets your needs and protects you interests.
Please contact us for further information.