Lump-Sum Lifetime Mortgage

Is a Lump-Sum Lifetime Mortgage For You?
Contributors: Nicola Date, Katherine Read. Edited by Rachel Wait & Reviewed by Francis Hui
Are You Looking to Release Equity With a Lump-Sum Lifetime Mortgage? Discover All the Ins & Outs of Lump-Sum Lifetime Mortgages & WHAT TO AVOID!

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Have you been wondering what all the fuss is about with lump sum lifetime mortgages?

Are you a homeowner over 55 and dreaming of an international holiday or major home renovations? Do you feel like you don’t have the means to live well, let alone afford such luxuries?

Did you know that your home could be the key to making these dreams a reality? Sounds crazy? Don’t worry; we’re here to be your guide.

What You’ll Learn in This Article:

    Our SovereignBoss team has researched over 200 plans by leading providers to pinpoint the most accurate information about lump sum lifetime mortgages.

    Here’s what we found!

    What’s a Lump Sum Lifetime Mortgage Plan?

    A lump sum lifetime mortgage1  is one of the most popular types of equity release schemes.

    It allows homeowners over the age of 55 to unlock a large lump sum of cash against the value of their estate.

    It’s ideal for those wanting to purchase a big-ticket item or go on a dream holiday.

    How Does a Lump Sum Lifetime Mortgage Scheme Work?

    A lump sum lifetime mortgage scheme works by enabling the homeowner to unlock a tax-free lump sum, while still retaining ownership of their home and staying there for life.

    The loan, plus fixed compound interest, is then repaid from the sale of the home when the last homeowner passes away or enters long-term care.

    What are the Benefits of Taking Out a Lump Sum Lifetime Mortgage Plan?

    The main benefit of taking out a lump sum lifetime mortgage plan is that you can gain access to a large amount of tax-free cash.

    Further benefits include:

    • Plans are simple – if you don’t need a financial product with many add-ons or extra features, then this may be the best solution to your cash needs.
    • Since you don’t have to make any financial provisions for future drawdown reserve facilities or any month-to-month repayments, your plan provider can pass on these savings by providing you with more reliable equity release deals, including bigger lump sums.
    • These are also perfect if you are looking to control your balance. It serves as the ideal option since it allows beneficiaries to monitor how the parents use the money.
    • You have the financial liberty to use the capital as you please.
    • You still retain 100% of your house until the life of the plan ends.

    What are the Pitfalls to Taking Out a Lump Sum Lifetime Mortgage?

    The main pitfall of taking out a lump sum lifetime mortgage is that the interest can quickly accumulate, leaving your heirs with less inheritance.

    Luckily, the ‘no negative equity guarantee’ ensures that your family will never pay more than the sale value of your estate.

    Further pitfalls include:

    • If you need to release more equity, you might need to consider going through another application process again.
    • It can affect your entitlement to means-tested benefits.

    How Much Can You Borrow With a Lump Sum Equity Release Plan?

    The amount you can borrow with a lump sum lifetime mortgage is dependent on the age of the youngest homeowner and your estate’s market value.

    The older you are, the more substantial the amount of tax-free cash you can release.

    Common Questions

    Can You Pay Back A Lifetime Mortgage?

    Can You Sell Your House If You Have A Lifetime Mortgage?

    How Much Interest Do You Pay On A Lifetime Mortgage?

    What's A Lump Sum Mortgage?

    In Conclusion

    Equity release can be one of the most confusing financial products available in 2022. It’s therefore essential to do your research and ensure you carefully understand the terms of the plans before going ahead and taking one out.

    You can start by learning more about lump sum lifetime mortgages.

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