I think you’ll agree with me when I say…
There’s a lot to learn when it comes to lifetime mortgages.
However, with the limited research options and expenses that come with consulting professional advice, getting the right information on equity release might be challenging.
Lucky for you, here are the most common lifetime mortgage FAQ’s.
Hopefully, you will find the answer you’re looking for. If not, please be sure to click below and see how much equity you can release or chat with an expert for free.
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Lifetime Mortgage FAQ’s
Frequently Asked Questions on Lifetime Mortgages
I think you’ll agree with me when I say…
There’s a lot to learn when it comes to lifetime mortgages.
However, with limited research options and costs that come with consulting professional advice, getting factual information might be challenging.
Well, lucky for you, here’s a comprehensive Q&A of the most frequently asked questions on reverse mortgages.
Hopefully, you’ll find the answers you’re looking for. If not, please be sure to click here and see how much equity you can release and chat with an expert for free.
Q: What’s a Lifetime Mortgage?
A: A lifetime mortgage scheme is when you borrow money secured against your estate, provided it’s your principal residence, while still retaining 100% ownership. However, when you pass on or move into long-term care, the plan provider puts up your home up for sale, and the money from the sale is used to pay off the mortgage. You can learn more about this, click here.
Q: What’s a Lifetime Loan?
A: Lifetime mortgages aren’t the only equity release products accessible. Just like the lifetime mortgage, the lifetime loan allows you to take out a mortgage that pays a cash lump sum that’s secured against the value of your property. You pay interest on the loan every month, and the amount you initially borrowed is recompensed when your lender eventually sells your property. If you want to learn more about this, click here
Q: What’s Equity Release?
A: Equity release is a way of retaining full ownership of a house or another object which has capital value, while also attaining a lump sum or a steady stream of income, using the value of the property. The “catch” though, is that you have to repay the plan-provider at a later stage, usually when you die or move out permanently. You can learn more about this, click here.
Q: What’s the Difference between Equity Release & Lifetime Mortgages?
A: The essential difference between the two plans is, when you take out a lifetime mortgage scheme, you still retain ownership of your estate. However, with the home reversion plans, you sell a percentage of your property in exchange for a lump sum of cash or a lifetime of monthly income. You can read more on home reversion plans, click here.
Q: How Do Lifetime Mortgages Work?
A: A lifetime mortgage scheme is a way of unlocking a lump sum from the equity in your estate. The plans work by securing a loan against your residence. The mortgage and any interest you have to pay are reimbursed when your house is sold, so you don’t have to make any monthly repayments. If you want to learn more about this, click here
Q: Is Using Equity a Good Idea?
A: Generally, lines of credit also provide you with lower interest rates than equity loans, even though both are less than a credit card since your estate secures them. So, you can use the equity line of credit to assist with your continuing financial needs like education expenses or several home renovation projects that you’ve overextended over time. If you want to learn more about this, click here
Q: How Much Can I Borrow With a Lifetime Mortgage?
A: The percentage of your estate that you can borrow against depends on your age, and the older you are, the more you can borrow. At 65, for instance, you can usually borrow 25% to 30%. If you’re, however, older, you can borrow as much as 50%. There are also minimum mortgage amounts – which can range from £15,000 to £50,000. If you want to learn more about this, click here
Q: How Does One Qualify for a Lifetime Mortgage Scheme?
A: With a lifetime mortgage plan, you take out a loan secured on your estate which doesn’t require to be repaid until you pass on or go into residential care. It frees up some of the wealth you have tied up in your property, and you can continue to reside there. Qualifying depends on your age, which is usually 55+ if you have an estate worth at least £70,000 in the UK, and your health conditions. If you want to learn more about this, click here
Q: Is Equity Release Like a Mortgage?
A: You could get a capital lump sum with an equity release mortgage that you pay back with interest when your lender sells your estate. The comparison also includes lifetime mortgages. Your estate may be repossessed, however, if you don’t keep up with the repayments on your mortgage. If you want to learn more about this, click here
Q: Can I Pay Back Equity Release?
A: You don’t have to pay rent to your equity release provider. For lifetime mortgages, you may be able to choose whether to pay back interest or let it build up. The lease is usually only paid back when you pass away or when your plan provider puts up your manor for sale. If you want to learn more about this, click here
Q: How Much Does Equity Release Cost?
A: Typically, this depends on your plan provider. If, however, the estate prices do recover, you’re more likely to have assets to pass on. For example, if you release £50,000 now from a house worth £250,000 and the mortgage runs for 15 years, you’ll build up a debt of £123,000. If we assume that property prices rise at 5pc a year, the value will be £528,000 in 15 years. You can learn more about this, click here.
Q: Can You Repay a Lifetime Mortgage?
A: You aren’t obliged to repay your lifetime mortgage pan during your lifetime unless the last surviving homeowner moves into permanent care. Alternatively, you can have a lump sum available and may want to pay off your lifetime mortgage plan so that you can include your home in your will. If you want to learn more about this, click here
Q: What Happens When a Mortgage Expires?
A: When your current lease term reaches its maturity date, you’ll have to renew the outstanding balance for another term. It’s a process you’ll likely do several times until you pay off your mortgage entirely. Just before your term expires, your current plan provider will send you a renewal offer in the mail. If you want to learn more about this, click here
Q: What Happens at the End of the Mortgage Term?
A: If you’re on a standard repayment mortgage plan, then it’s likely that you’ve paid off your secured loan at the end of your term that you agreed on in your contract at the beginning – unless you made overpayments, fell behind or extended your loan term. Once you reach the end of your interest-only mortgage term, your debt will still be outstanding. If you want to learn more about this, click here
Q: Can You Pay Off Mortgage at End Term?
A: It depends on the type of term you opt to take (open or closed). You’ll have to consider the prepayment charge should you choose to pay off your mortgage before the end of the mortgage term. Each of these choices may affect how rapidly you’ll be able to pay off your mortgage and how much interest you will have to pay. If you want to learn more about this, click here
Q: Can I Get a Mortgage If I’m Retired?
A: Financial planners and mortgage lenders say, yes. Under the Equal Credit Opportunity Act, plan providers can’t discriminate against borrowers based on age, which are usually retired borrowers. Like the working mortgagors, you need to show that they have good credit, not too much debt, and enough on-going income to recompense the mortgage. If you want to learn more about this, click here
Q: Can I Get a Mortgage at 55?
A: Age is just a number, or so the saying goes. However, it does matter if you’re applying for a home equity loan. If you’re aged 55 and above and need a mortgage or to re-mortgage into retirement, you may hassle to get the mortgage you want. Click here our guide to getting a mortgage if you’re over 50.
Q: Can a 60year old get a 20year Mortgage?
A: Retirees every so often assume that they’re eligible to a 30-year mortgage. Legally, however, banks can only offer mortgages based on one’s financial qualifications alone. It means applicants can’t be turned away based on their age, whether they are 50, 60, or even 90 years old. If you want to learn more about this, click here
Q: What’s the Maximum Age for a Lifetime Mortgage?
A: Typically, there’s no maximum age for applying for a lifetime mortgage. However, most plan providers have set their age limits. When you take out the mortgage, most lenders usually set a maximum age of 65 to 80. However, when the mortgage term ends, it’s often a maximum age of 70 to 85. If you want to learn more about this, click here
Q: Can You Get a Mortgage At 60?
A: For mortgages over 60 – You’ll only be able to apply for shorter mortgage terms and may need to prove that you have your pension and investment income. When it comes to mortgages for over 70 – It’ll be tough, but not impossible, to get a lease. However, if you are a proprietor, it may be possible to get a secured loan. If you want to learn more about this, click here
Q: What’s a Lifetime Variable Mortgage?
A: A lifetime mortgage enables homeowners to turn equity that has built up in their estate into tax-free capital without having to sell their house or downsizing in an unfavourable market. A lifetime mortgage is built to last your lifetime, with interest rolling up over time. If you want to learn more about this, click here
Q: What’s a Lifetime Interest-Only Mortgage?
A: An Interest-only lifetime mortgage lets you make monthly interest payments. If you’re able to do this for the lifetime of your plan, there won’t be any unused balance to repay when it reaches its ends – only the amount first borrowed. Click here to read more on this.
Q: Can I get Interest-Only Mortgage at 60?
A: Some mortgage plan providers insist that you pay off a retirement interest-only mortgage by the time you’re a particular age. It can be as low as 80 or as high as 99years. Moreover, the amount you can borrow with an equity release lifetime mortgage isn’t interconnected to your monthly income – only to the value of your residence and your age. Click here to read more on this.
Q: Can I get An Interest-Only Mortgage at 65?
A: With the mortgages from various equity release companies, that are mostly aimed at borrowers aged 55 to 85 (when you’re applying), repayments can be extended up to the age of 99. In both cases, the highest amount you can borrow is 60% of the value of your estate if you go for interest-only but 75% with the repayment mortgage scheme. Click here to read more on this.
Q: Can I Extend My Interest-Only Mortgage Term?
A: It’s possible to ask your plan provider to lengthen your term to offer you more time to save for the lump sum. It could give you the chance to switch at least some or the entire loan to a repayment mortgage, as by extending the term, your monthly repayments will be lower and more reasonably priced. Click here to read more on this.
Q: Do Banks Still Do Interest-Only Mortgages?
A: Supposing you make all your payments, you’re guaranteed to pay off the whole loan amount at the end of the term. With an interest-only mortgage plan, you only pay the interest on the lease. At the end of the mortgage term, you’ll still be obligated to pay the initial amount you borrowed. Click here to read more on this.
Q: Can I Put My Mortgage On Interest-Only?
A: The government and financial institutions are now restricting how much of your mortgage you can pay interest only. Plan providers are only allowing you to pay up to 90% of your mortgage interest only, which means if you took out a 110% LTV mortgage when the market was booming, you’d still have to pay the capital on the balance of your mortgage. Click here to read more on this.
Q: Are Interest-Only Mortgages a Good Idea?
A: Interest-only mortgages don’t often suit most borrowers. Therefore, make sure you only get one if you’re aware of the risks and have a repayment plan to save enough capital by the end of the term. You’d need to be able to make a profit from your investment vehicle and preferably have a backup plan to aid you in paying off the loan. Click here to read more on this.
Q: Should I Pay Off My Interest-Only Mortgage?
A: With an interest-only mortgage, you pay off the interest on a lease, but not the money borrowed. It means that the monthly repayments are mostly a lot lower than those on repayment mortgages. As a result, at the end of the mortgage term, you will need to find a way to pay back what you owe in a single lump sum. Click here to read more on this.
Q: What are the Dis-advantages of Interest-Only Mortgages?
A: Some of the drawbacks to Interest Only Loans include:
- The rising mortgage rates increase risk if it’s an ARM
- Many people tend to spend the extra money extravagantly instead of investing it
- Most people can’t afford principal payments when the time arrives, and many aren’t disciplined enough to pay extra toward the principal
- The income may not grow as rapidly as you planned
Click here to read more on this.
Q: How Much Can I Borrow on an Interest-only Mortgage?
A: The maximum loan for interest-only mortgages offered by most lenders has gone up from 50% to 60% Loan to Value (LTV). It means that you can borrow up to 60% of the value of your residence on an interest-only basis. You can also pay back up to 60% of the mortgage on an interest-only basis. Click here to read more on this.
Q: Can I Overpay an Interest-Only Mortgage?
A: if you make overpayments, your plan provider should apply these to your outstanding debt, and cut your regular interest payments from the next calculation date. If your over-payment significantly dents the debt, it may make moving onto a repayment mortgage a reasonable decision. Click here to read more on this.
Q: Can You Re-Mortgage at the End of an Interest-Only Mortgage?
A: As per the federal law, your mortgage contract will say you have to repay the full amount at the end. So if you have an interest-only re-mortgage, you can’t rely on your income-provider coming up with many options for you at the end, let alone a great one like allowing you carry on with making your current monthly mortgage payments. Click here to read more on this.
Q: Is Interest-only Mortgage Better than the Repayment Option?
A: It’s more expensive than the repayment plan. With a repayment mortgage every year, the amount of interest you owe decreases as you’re paying it on a smaller and smaller loan. However, with an interest-only mortgage, the money owed doesn’t shrink, so you keep on paying interest on the full amount. Click here to read more on the repayment option.
Q: Does the Interest-Only Mortgage Affect Credit Rating?
A: No. Switching your mortgage plan to interest-only won’t affect your credit file any differently than the repayment option – if you’re late, it’ll have a negative effect. If you’re early, it’ll have a positive one. The monthly payments will be less on interest-only – but overall, you will pay more. Click here to read more on this.
Q: Can You Borrow Equity against Your Home with Bad Credit?
A: Yes. You can actually get a home equity loan or HELOC — also known as a second mortgage — even with bad credit. That’s because you’re using your property to guarantee the loan. It’s practically a balancing act between your credit score and your DTI. So if you have a high DTI, it can assist you to have a higher credit score. Click here to read more on this.
Q: Will Mortgage Rates Go Up in 2019?
A: According to most industry analysts, financial companies expect the average rate for 30-year fixed mortgages to hit 5% in 2019. Presently, it’s around 4.7%. The 10-year Treasury yield — which mortgage rates tend to follow — could upsurge close to 3.5% before dropping back down to 2.45 per cent by the end of 2019.
Q: Will Interest Rates Go Up in 2019?
A: Most equity release companies are still betting that interest rates will remain on hold at 0.75% for the rest of 2019 and upsurge only once, by a quarter of a point, over the next three years.
Q: Is It Worth Fixing Mortgage for 10years?
A: Your monthly payments will be higher, at least at the beginning. Your interest rates will be higher on a 10-year fix than when you have a shorter-term deal, pushing up your monthly repayments: the lowest mortgage rate for a 10-year-fix (60% LTV) is 2.49%, while for a 2-year-fix (60% LTV) it’s 1.35%.
Q: Can You Still Get Interest Free Mortgages?
A: By having an interest-only mortgage, your monthly payments pay only the interest charges on your mortgage, not any of the initial amounts borrowed. It means your payments will be less than on a repayment mortgage, but at the end of the loan term, you’ll still owe the initial amount you borrowed from your provider. Click here to read more on this.
Q: Can Equity Release Pay Off Mortgage?
A: Yes, it can. According to most financial advisers, you must be able to pay off any existing mortgage or debt secured against your estate by completion – either with the proceeds of the lifetime mortgage plan or other savings you might have.Click here to read more on this.
Q: Does Halifax Do Lifetime Mortgages?
A: Yes, Halifax pulls the lifetime mortgage product. The withdrawal of this interest-only lifetime mortgage leaves Stone Haven as the only plan provider proving consumers with this form of a financial product. However, Stone Haven’s scheme is less attractive as it will only lend on an interest-only basis at lower loan-to-values.
Q: Does Halifax Do Interest-Only Mortgages?
A: Yes. With the lifetime mortgage industry growing at an alarming rate, Halifax has made it easier for its consumers to get an interest-only mortgage. Halifax will also allow you to say that you’ll sell your estate as a means of paying back the debt. However, you must have an income of more than £100,000 a year (£150,000 if you apply as a couple) and £200,000 equity in your residence.
Q: Does Halifax Offer Equity Release?
A: Yes, it does. However, the decision-making on the Halifax Home Retirement Mortgage Schemes is now dependent upon what Scottish Widows are providing as they currently administer Halifax’s equity release schemes.
Q: Does Santander Do Lifetime Mortgages?
A: L&G provides Santander customers with lifetime mortgage schemes. According to news, Legal & General decided to sign a five-year agreement to make available lifetime mortgages to Santander’s consumers. The service will also be accessible to existing Santander mortgage clients who are thinking about releasing equity from their houses to help fund their retirement.
Q: Does Santander Do Interest-Only Mortgages?
A: Yes, and according to sources, Santander said that they’d extend the maximum interest-only mortgage borrowing age from 65 to 70years from next Tuesday (7 February 2019). The new policy will apply to consumers who choose to have any part of their mortgage as interest-only.
Q: What’s the Maximum Age for a Santander Mortgage?
A: With the various changes occurring, the maximum age has extended from 75 to 85, and the maximum lending term increased from 25 years to 40 years for its buy-to-let products. It’s essential to note that the income-provider has extended its maximum mortgage term to 40 years, from 35 years, for residential capital and interest repayment deals.
Q: Is Re-Mortgaging a Good Idea?
A: Perhaps your current plan provider has denied lending you extra money or the terms it’s giving you aren’t worthwhile. Re-mortgaging to a new income-provider might allow you to raise cash cheaply on low rates. The most commonly tolerable reasons to raise capital are for home renovations and paying off other debts. Click here to read more on this.
Q: Can You Move House with a Lifetime Mortgage?
A: If you have a lifetime mortgage plan, you borrow equity against the value of your manor and then repay this cash, plus interest, at the end of the deal. If you want to move home, your lender should be able to transfer the debt to the new estate. Click here to read more on this.
Q: Can I Sell My House without Equity?
A: Yes. However, selling your home can be a drawn-out and overly complicated matter. The process can become even more challenging if you owe more on your mortgage than the price your estate is currently valued at. Equity in property is one of the most significant benefits you can have as a proprietor during the process of selling your house. There are five ways you can sell your home without equity:
- You can sell through a realtor
- The short sale or compromise sale
- Put it up for sale on your own without asking for assistance from a realtor
- You can sell to an investor
- There are also companies on the national level that buy homes without equity
Q: Can I Re-Mortgage My House If I Own It?
A: Yes, you can, re-mortgage. You may think your situations are unusual, but, whatever your circumstances, lenders will usually consider an application. So, if you don’t have an outstanding mortgage, and you own 100% of the equity in your property, your chances of re-mortgaging are high. The mortgage deals presented to you will depend on how much you want to borrow as a percentage of the current value of your estate, which is known as the loan to value ratio (LTV)
Q: Can You Have Two Primary Residences?
A: The short answer to this is that you can’t have two principal residences. You’ll need to figure out which of your houses will be considered your principal residence and file your taxes accordingly.However, while you may not be able to claim multiple primary homes for tax purposes, the IRS does offer you tax deductions if you own several homes. Click here to read more on this.
Q: How Much Deposit Do I Need for a 2nd House?
A: Most second home mortgages need at least a 25% deposit, and you may require even more than that if your present income doesn’t cover both mortgages at the same time. In addition to this, your income will be even more significant in the application for a second home mortgage. Click here to read more on this.
Q: Can I Re-Mortgage with a Poor Credit Score?
A: The simple answer to this question is yes. However, if you have more than a minor issue with your credit score, then you’re unlikely to get a re-mortgage on the high street.
Q: Can I Sell My House with Equity Release?
A: Yes. The home reversion plan enables you to sell part or all of your estate to your preferred home reversion plan provider. In return, you’ll receive a lump sum or regular payments. You’ll generally get between 20% and 60% of the market value of your property (or the part you sell), whether or not you release equity in several payments or as a single lump sum. Click here to read more on this.
Q: What’s a Retirement Mortgage?
A: The Retirement Mortgage is a lifetime mortgage plan, meaning that you don’t have to repay the amount you borrow until you pass on or move permanently into long term care. After that, you can opt to stop paying the interest, meaning it’ll be added to the mortgage instead. Click here to read more on this
Q: What’s a Retirement-Interest-Only Mortgage?
A: In response to the limited borrowing prospects for older homeowners, the financial services regulator – the Financial Conduct Authority (FCA) has now made its rules more comfortable, thus letting homeowners repay their loans to when the last proprietor passes away or goes into residential care. Click here to read more on this
Q: What’s a Flexible Lifetime Mortgage?
A: A lifetime mortgage is a form of equity release that enables clients (homeowners) to unlock some of the equity from their estate without having to move or downsize to a smaller house. There are typically no monthly payments with the flexible lifetime mortgage. Instead, the interest is added to the amount you owe every month.
Q: Can I Increase My Mortgage Term?
A: Extending your mortgage term can decrease your monthly payments or aid you in avoiding a probable foreclosure. Still, it would be best if you gave the decision to extend your mortgage loan some cautious thought. Perhaps you can manage your loan payments better if they are smaller once you lengthen your mortgage.
Q: What’s the Best Way to Release Equity from Your House?
A: Equity release is, in a nutshell, a way to release the value of your estate and convert it into a cash lump sum. You can unlock the cash through several modes (like the home reversion plan and the lifetime mortgage) which allow you to access – or ‘release’ – the equity (capital) tied up in your house if you’re 55+. Moreover, don’t need to have fully paid off your mortgage to do this. Click here to read more on this
Q: What’s an Enhanced Lifetime Mortgage?
A: Also known as ‘impaired’ lifetime mortgage scheme, the enhanced lifetime mortgages is an equity release scheme where the lending criteria depends on your health records. Click here to read more about this.
Q: What’s a Lifetime Tracker Mortgage?
A: A Lifetime Tracker Mortgage is a form of variable rate mortgage. Tracker rates can be for an exploratory period (typically anything from one year to five years), or you can get a lifetime tracker, meaning you’ll be on it for the whole term of your loan.
Q: Are Lifetime Mortgages Regulated?
A: Yes. As per the federal law, the Financial Conduct Authority (FCA) regulates all home-owner mortgages. However, most buy-to-let mortgages aren’t. Lifetime mortgages, like the equity release plan that allows older borrowers to unlock cash, also have their own FCA rules. Click here to read more on this
Q: What Happens When My Fixed Term Mortgage Ends?
A: If you decided to go with the fixed-rate mortgage, your interest rate is locked in for a fixed period. In other words, the interest rate – and subsequently, your monthly mortgage repayment – will remain unchanged for an agreed period, but eventually, all good things come to an end. Click here to read more on this
Q: How Does 60 Lifetime Lease Work?
A: The Home for Life Plan is a lifetime lease for people aged 60 years old +. Using the scheme means you could pay up to 59% less than the estate market price to live securely in your new estate without rent, mortgage or any interest repayments for your lifetime. Click here to read more on this
Q: Can You Pay Off a Mortgage with a Home Equity Loan?
A: If you’ve built up equity in your property but still have a mortgage balance to pay off, you may want to use the home equity line of credit (HELOC) to decrease your regular payments and the overall interest you pay on your loan.
We all deserve a break and with retirement comes free time. So, who says you can’t just relax, travel, work on your various duties and enjoy your golden years hassle-free?
Well, equity release is one of the best financial decisions you will ever make in a bid to enjoy the pleasures and wonders of life. Nevertheless, it can also be quite challenging to understand its form. Thus, if you didn’t find the answers you were searching for, don’t worry. You can click here for more information on how much equity you can release and chat with an expert for free.
Equity release is one of the best financial decisions you can make to maintain your lifestyle after retirement. However, it can also be quite challenging to understand its form. So, if you did not find the answers you’re searching for, do not worry. You can click here for more information on how much equity you can release and chat with an expert for free.
How much money could you release?
An equity release allows you to access the value of your home, tax-free without having to sell up, so that you can have money to spend on whatever you want or need.