You do not have to make any ongoing payments to life time mortgages but you have to be of a certain age and you may only be able to borrow about a quarter of the property value – the actual amount will depend on your age.
Be careful, these loans roll up and are taken from your home when you die. Talk to your family before commencing a lifetime mortgage. This is a very specialised area of lending with many pitfalls, please call us for advice.
Lifetime mortgages may be suitable for retired persons wishing to release equity from their home without the need to make payments of interest or capital to the lender.
There are several types of scheme, the most common being where interest rolls up until death and then the home is sold to repay the original borrowing and accrued interest.
There are certain guarantees required of a lifetime mortgage provider
- The debt cannot be more than the value of the house
- The lender cannot force sale of the house while you are alive
- You can settle the debt if you wish while still alive
- You can transfer the debt to another property, providing it is suitable security, should you need to move home
The amount that can be borrowed is linked to age and the value of the property. No proof of income is required since no repayments are made. Credit status is not normally an issue unless you are a declared bankrupt.
Before releasing equity from your home you should make sure that it will not affect any state benefits that you might receive; many benefits are means tested and could be withdrawn if you release equity from your home.
You should also find out if you are entitled to any benefits that you were not previously aware of, this may negate the need to release equity from your home.
We recommend that you discuss equity release with your beneficiaries before taking matters any further.
The service we provide is to find the most suitable type of equity release mortgage for your individual circumstances – there are many to choose from and making the wrong choice could prove very costly and leave your family very angry after your death. We will make enquiries to your local authority to determine whether or not you could be entitled to any benefits and make sure you are aware of the implications of benefit entitlement as a result of equity release.
We charge a fee for our work in respect of equity release and will discuss this with you before you make any commitment.