Lifetime Mortgages
Lifetime Mortgage Brokers
A Lifetime Mortgage is a popular type of product for those that are heading towards the end of their career and are looking to have a comfortable retirement. Here at Avail Mortgages, our friendly team can provide a referral to third party specialists who will assist you in finding a mortgage of this kind. In this guide, we’re going to be looking at these types of alternative options and lay out the benefits, and requirements, so that you can decide whether this long-term loan is right for you. Besides offering referrals for some specialist products, we also offer Buy To Let, High Net Worth, and 5% Deposit Mortgages, amongst dozens of others, all of which are perfect for a variety of personal circumstances.
Our impartial advice is carried out following the strict Treating Customers Fairly Initiative* which the Financial Conduct Authority (FCA) layout*. This should give you confidence that the independent advice on mortgage plans is fair, impartial, and done with your individual circumstances in mind.
To learn more, feel free to get in touch with an expert adviser from Avail Mortgages by phone on 01484 556245 or email us [email protected]
What Is A Lifetime Mortgage?
A Lifetime Mortgage is a process by which the applicant borrows money, in the form of a lump sum, or series of lump sums*, against the value of their home. A key feature of these products is that you don’t pay anything back until you pass away, or go into long term care. There are no monthly repayments, instead, when either of these things happens, the property is sold and the funds raised are used to pay off the loan.
You can also choose to ring-fence off a portion of the value of your property to leave as an inheritance to your family and loved ones.
This is different to a conventional mortgage where interest is charged on an amount that decreases over time. Instead, interest is charged on an increasing sum, which means that Lifetime Mortgage schemes can grow into considerable debt.
However, it’s important to note at this juncture that, because of the work of the Equity Release Council, you’ll never have to repay more than the value of the property*. This ensures that you won’t find yourself in an eye-watering amount of debt as you head into retirement.
Who Are They For?
- Usually, people between 55 and 60 will begin to apply for these products.
- People who want to enjoy extra income in retirement.
- You want to release at least £10,000.
- Homeowners with a UK property that is worth at least £70,000.
Is It Right For Me? Here Are Some Things To Consider:
- It may affect the inheritance you leave loved ones.
- Because of the interest roll-up, you may owe more than the value of your home. To combat this, ensure there is a no-negative equity guarantee in place.
- Your tax position, and entitlements to means-tested benefits, could be affected.
- You must keep your home in a reasonably good condition so that it can retain the same value, and be in line with property prices in that area.
What Are The Different Types?
Broadly, there are four types of these mortgages:
- Interest roll-up: You receive an initial cash lump sum, or a series of lump sums, and get charged interest which is added to the loan. You don’t make regular monthly repayments and the amount you borrowed (plus the interest) is paid when your home is sold.
- Interest-paying: A lump sum payment is received and monthly, or ad-hoc, repayments are made to reduce the amount of interest that is added.
- Drawdown Lifetime Mortgages: This is where you take a smaller amount of money at the start, and then draw down further borrowings as and when you need to.
- Enhanced Lifetime Mortgages: For those with shorter than average life expectancies, an enhanced version allows you to enjoy all the benefits, even if you’re younger than 55.
Here Are Some Of The Benefits
Control – As you’ve seen, there are several types to choose from which may be more suited to you, and allow you more control.
Security – You get to keep your home, you simply borrow against it.
Flexibility – In some instances, you only have to take out £10,000, and you can always take out more later.
Potential Drawbacks
Cost – They can be high and, as a result, meaning you may leave very little for your loved ones when you pass away.
Early repayment charge – Equity release schemes such as this won’t let you pay off the loan, allowing interest to build over the full term.
Moving issues – The moving process can be made much more difficult if you decide to move to a more expensive, or cheaper property.
Why Choose Avail?
We offer a bespoke approach because we know that each customer that walks through our door, be they from Harrogate, Huddersfield, York, or further afield, is unique.
Our team will work around your busy schedule and will always be there to answer questions, and provide all the relevant information. From our cutting-edge client portal to our range of mortgages and insurance products, we have everything you need to make the right choice for you.
Get In Touch
If you’re interested in this type of mortgage, get in touch with our equity release advisers today by phone on 01484 556245 or email us [email protected].