More and more people in the UK are utilising the equity built up on their home and enjoying a better retirement. Modern lifetime mortgage plans are now more flexible, and those who are members of the lifetime mortgage council will guarantee that you will never owe more to the loan provider than the value of your property.
The words ‘lifetime mortgage’ have a bad stigma surrounding them. As an industry, we are trying to change our terminology as the market is not as it used to be. Most lenders are now part of the lifetime mortgage council. This ensures a minimum standard in their products that they offer, meaning that they are safe and accessible for consumers. It gives you a ‘no negative equity guarantee’ and ensures that the lender works within a statement of principles. This is all good news for you as it means you have even more protection.
Retirement lending or lifetime mortgage enables you to unlock money, equity, from your home while you still live there. You don’t have to make any repayments until the property is sold – either on your death or when you move into care, although interest will accrue against the debt. You can make repayments if you want to and can afford to.
To qualify for an lifetime mortgage plan, you must be aged over 55 and you must own your own property. The plan can provide you with a cash lump sum, a regular income, or both.
There are two main types of lifetime mortgage plans available — Lifetime Mortgages and Home Reversion Plans. Both types of plan allow you to remain in your home and unlock cash to be used for whatever purpose you require. Your estate will be reduced using both methods. You should think carefully before securing debt against your home.
It is important to note that, with a home reversion plan, some or all of your home will be sold and you will pay a nominal amount of rent to stay in your home.
We do not give advice on home reversion plans.
With a lifetime mortgage, you will be charged interest. You can either pay this interest off on a regular basis or let it roll up. By using the latter method, your debt could increase quite rapidly, but you will not have to make any regular payments.
It is also worth mentioning that an lifetime mortgage product may affect your tax position and your entitlement to state benefits. You should ensure you know how these will be affected.
Many people use lifetime mortgage to help a cash flow issue, help plan for their retirement or help realise a dream purchase.
There are alternatives to retirement lending or lifetime mortgage that should be considered:
Using savings & investments
Other forms of borrowing e.g. traditional mortgage. You probably will have to make regular payments using this method.
Check you are claiming all the state benefits you are entitled to.
Can a family member or friend help?
Can your pension arrangements be used to provide the necessary funds?
Lifetime mortgage is not suitable for everyone, and proper independent financial advice and proper independent legal advice must be sought before entering into any lifetime mortgage plan.
We feel it is important that you involve your family in the decision process, because releasing money from the home will affect the amount that you will leave behind when you die.
Taking out lifetime mortgage may affect your tax position and entitlement to other benefits.
Our advisers are experts in the retirement lending arena and can help guide you through the process and advise on a suitable product.
Contact us to make sure what you’re doing is correct for you and you have the best possible deal.
Our fee for lifetime mortgage advice is £500.00.
This is a life time mortgage. To understand the features and risks, ask for a personalised illustration. Your home may be repossessed if you do not keep up repayments on your mortgage.
The Financial Conduct Authority does not regulate taxation and trust advice, will writing and some aspects of buy to let mortgages, development finance and auction finance.
Maximum Cash Release£* *This is an indicative amount and may vary from lender to lender. You should not rely on this as an accurate figure of your maximum borrowing. This should be a starting point and you should seek advice to get a more accurate indication of your maximum borrowing amount.