People considering lifetime mortgages often have various questions to help them understand the product, its implications, and whether it’s the right financial choice for their circumstances.
The below are some examples of the questions our clients are asking when it comes to Equity Release.
Equity release is a complex product, and it is essential that correct advice is received. Our brokers will explore all options with you to ensure the correct product and advise is provided. Other options, such a standard mortgage or a retirement interest only (RIO) mortgage, may be a more appropriate alternative, so after an initial meeting we can consider all options available to you.
You should always think carefully before securing a loan against your home to repay existing debt.
The loan, plus compound interest, is typically repaid through the sale of the property when the last remaining applicant passes away or moves into long-term care.
What is a lifetime mortgage?
A lifetime mortgage or Equity Release mortgage, is a financial product that allows homeowners aged 55 and older to release a portion of their home’s equity without the need for monthly repayments, with the loan typically repaid from the proceeds when the property is sold or upon the homeowner’s passing.
How does a lifetime mortgage work?
Allows homeowners, typically aged 55 and older, to borrow against the value of their home without monthly repayments, with the loan and accrued interest repaid from the sale of the property upon the homeowner’s death or move to long-term care. The funds to be released can used for most purposes.
Am I eligible for a lifetime mortgage?
To be eligible for a lifetime mortgage, individuals typically need to be aged 55 or older and own a property over £70,000.
How much can I borrow with a lifetime mortgage?
The amount you can borrow will be determined by your current age & the value of your property. Typically, the older you are the more you can borrow. Most lenders will require you to release a minimum of £10,000.
Are there any fees associated with a lifetime mortgage?
Typical fees you will need to consider when arranging an Equity Release or Lifetime mortgage. Lender arrangement fee, mortgage valuation fee, solicitor fees & broker fee.
What are the implications for my inheritance?
Equity release reduces the value of your estate, potentially leaving less for your heirs. With some equity release products, interest accumulates over the years, compounding the debt and potentially eroding the remaining equity in your home.
Will I be able to stay in my home for as long as I want?
You can continue to live in your home for as long as you wish, maintaining your independence and comfort. The loan is not repaid until your passing or you move into long term care.
How is the loan repaid?
A lifetime mortgage is typically repaid when the homeowner passes away or moves into long-term care, with the loan and accrued interest settled from the proceeds of selling the property.
What happens if I want to repay the loan early?
It is important to be aware that lenders may charge an early repayment charge, should you wish to repay your mortgage within a specified period. Lifetime mortgages are designed to last for life, so repaying early will possibly mean having to pay early repayment charges.
How does a lifetime mortgage affect my means-tested benefits?
Receiving a lump sum from equity release may affect means-tested benefits or grants you are eligible for. It is important to check these before entering into a Equity Release Agreement.
Is independent advice recommended?
Equity Release is a complex mortgage product & we strongly recommend that you seek independent advice before considering an Equity Release product.
What is the difference between a lifetime mortgage and a home reversion plan?
The key difference between a lifetime mortgage and a home reversion plan is that a lifetime mortgage allows homeowners to borrow against their property’s value, with interest accruing, while retaining ownership, whereas a home reversion plan involves selling a portion or the entire property to a provider in exchange for a lump sum or regular payments, with no interest accruing but also giving up some or all ownership rights.
Talk to our Equity Release Advisors
Equity release is a complex product, and it is essential that correct advice is received. Our brokers will explore all options with you to ensure the correct product and advise is provided. Other options, such a standard mortgage or a retirement interest only (RIO) mortgage, may be a more appropriate alternative, so after an initial meeting we can consider all options available to you.
If you want to discuss Equity Release or find out more about your options, please feel free to contact us 01920 821333.
Any initial conversation or meeting will carry no cost and we will ensure you are fully aware of all potential costs and commitments before progressing any application. We would also ask a friend or family member be present for any potential meetings if you would prefer this option.
A lifetime mortgage may impact the value of your estate and it could affect your entitlement to current and future means tested benefits. The loan plus accrued interest will repayable upon death or moving into long term care.