A lifetime mortgage is a type of equity release that’s usually for people aged 55 and over. It’s a tax-free loan secured against your home that can be a great way to release money tied up in your home for things such as home improvements, gifting to family or just to make life a little easier.
You can use a Lifetime Mortgage to release money in two ways:
1) Drawdown amounts can be tailored to your needs, allowing for smaller or larger loans as required
You’ll still own your home and won’t need to move, though depending on the amount you release, it could impact means-tested benefits you may be receiving. The loan plus any interest will be repaid from its sale when you die or move into long-term care.
You can also use a lifetime mortgage to help buy a property.
2) A single lump sum, where you can take the whole loan at once
Don’t forget that paying the loan off will mean that there’s less money from the sale to leave to your loved ones.
On the plus side, many lifetime mortgages include a No Negative Equity Guarantee. That means you or your loved ones will never owe your lender more than the value of your home.
Type of lifetime mortgage
Who are they good for?
Key Details
Interest Roll Up
It suits people who want flexibility but don’t want to make monthly interest payments.
You can draw down your money as one big tax-free lump sum or several smaller ones, without having to pay interest every month.
The interest is added to your loan, which means the amount you owe can grow quickly.
Optional Payment
It suits people who want flexibility and are happy to make monthly interest payments, with the option to stop them.
You can draw down your money as one big tax-free lump sum or several smaller ones, while paying some or all of the monthly interest on your loan.
You can stop making payments whenever you choose but once stopped they can’t be restarted.
Any unpaid interest is added to your loan so depending on how much you pay and for how long, the amount you owe could grow quickly.
Your children/beneficiaries can choose to make the payments to stop the loan amount increasing over time.
Payment Term
It also suits people who want to make
interest repayments for an agreed term, for example until retirement.
It’s for people aged 50 and over, and gives you a tax-free lump sum.
You make full monthly interest payments for a pre-aged period of time which can run up to the oldest borrower’s 75th birthday. Afer that the
interest is added to the loan.
Paying the interest reduces the overall cost of the loan but if you don’t keep up the monthly payments, as a last resort your home could be repossessed.
John and June’s story
Retirees John and June used equity release to support their family and helped them open “a whole new chapter in life.” The couple have lived in the same village for 30 years and are deeply rooted in their community. A lifetime mortgage boosted their finances, allowing them to stay in the home they love and help their children at critical times in their lives.
“It makes me feel great, because we can help our children, without having to sell our home when we don’t want to do that, or change our lifestyle” says June. “And it’s given me complete peace of mind; I know that if something does happen to John, I can stay in this house if I want to.”
Clients who understand and feel capable with their finances are better prepared emotionally and practically for retirement…
“It’s the best decision we’ve ever made,” says John.“We have all the benefits of living here, but all the benefits of being able to help ourselves, our children and our grandchildren – and have a lot more fun.”
“Our children will get our money when we die, but that’s not the time they really need it. They need it now, when there are bills coming through the door and their own children to bring up.