January 25, 2016

Lifetime Mortgage

A Lifetime Mortgage is a special kind of loan for retired home owners. Most are available from age 60 but there are now some plans available at 55. Although it’s secured on your property, there are no monthly payments to make and it is designed to help you remain in your home for as long as you wish.

Interest will be added to your loan and the full amount is paid back when your home is eventually sold following your death (or the death of the second borrower if it is a joint application) or if you move into long-term care or sheltered accommodation.

Drawdown Plans

Many people don’t require a one off amount from Equity Release; some spending plans may be years ahead. A drawdown Lifetime Mortgage provides a facility which can be drawn down gradually, as and when you need it.

It enables you to borrow what you need now with the facility to take further funds later on with minimal paperwork. The main advantage is that you only pay interest on what you borrow. This is usually preferred to releasing a larger sum only to keep in a bank account pending future plans. We discuss this option with all clients.

Advantages of a lifetime mortgage

  • No monthly payments
  • You retain ownership of your home and benefit from any increase in its value.
  • A lifetime mortgage with a drawdown facility enables you to release further funds in the future without a repeat of advice, legal and valuation fees.
  • The minimum age is 55 compared to 65 for a home reversion plan.
  • You can repay a lifetime mortgage, for example if you decided to downsize to a cheaper property.

Disadvantages of a lifetime mortgage

  • If you want to repay the plan, early repayment charges may apply.
  • The maximum amount available is usually lower than a home reversion plan.

 

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