Use the FREE Retirement Mortgage Calculator
See how much money you can release from your home.
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Use the FREE Retirement Mortgage Calculator
See how much cash you can get from your home.
Did You Know? Every 12 minutes a homeowner over 55 in the UK unlocks £91,667 tax-free money.
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An equity release could be a great way to help you enjoy your later life to the fullest. By borrowing a tax-free lump sum you could be able to fund home improvements, help younger family members get on the property ladder, or simply maintain your lifestyle in retirement.
How much you can borrow depends on a number of factors, including your age, the kind of property you own, and its value. Use our retirement mortgage calculator to find out how much equity you could get.
When comparing the retirement mortgage market, a specialist adviser will explain:
- You have to get advice before releasing.
- Check for plans that have a no negative equity guarantee, so you’ll never be indebted more than your home’s value.
- It reduces the value of your estate.
- The initial consultation is free with no obligation.
- The most popular form of retirement mortgage is a lifetime mortgage,
- which is a loan secured against your home. Remember that you will still own your home.
A retirement mortgage is a way of releasing the wealth tied up in your property without the need to move.
With retirement mortgage products, if you are over the age of 55, you can either borrow against the value of your home or sell all or part of it for a regular monthly income or a one time pay, or the facility to get at retirement mortgage as and when you like or a combination of these options.
Although there are many different plan available, they can all be split into four categories of retirement mortgage schemes.
Lifetime Mortgage Loan
You get a lump-sum from the value of your property, by taking out a mortgage on your property (provided it’s your primary residence) whilst maintaining 100% ownership of your home. This amount, plus any interest accrued, (you can opt to make repayments) is repaid from the sale of your property when you pass away or move into long-term care.
Drawdown Lifetime Mortgage
This5 works similar to Lifetime Mortgage but with a regular cash reserve/draw down option allowing you to withdraw amounts at a frequency you like up to a specified amount of years, or until the reserve fund has been used up.
Interest-Only Lifetime Mortgage
You get a lump-sum and pay a monthly interest on the loan, which can be fixed or variable, rather than allowing the interest to roll up. The amount you originally acquired is normally repaid when your home is eventually sold.
Home Reversion Plan
Here, you sell some or all of your property to a provider in exchange for a lump sum of money or payments, whilst maintaining the right to keep on residing in your home, rent free, for as long as you live, but you have to agree to preserve and insure it. At the end of the plan your property is sold and the sale proceeds are shared according to the proportions of ownership.
You are allowed to use the money on almost anything you like. There are many reasons for releasing from your home and here are a few of them.
Common Equity Release Uses:
- To supplement your pension income to cover living expenses
- To settle a repayment mortgage or clear the balance on an interest-only mortgage
- To improve your lifestyle
- To see your family enjoy their inheritance while you’re still here
- To carry out some home improvements
- To take that holiday of a lifetime
- To help your children onto the property ladder
- To pay off other outstanding debt and lower your monthly outgoings.
Retirement mortgage policy is not right for everyone and it’s necessary that you fully consider your options and financial advice before making a decisions. It’s also important that, if you do decide to use the product, you choose one that meets your needs.
Remember that taking a retirement mortgage plan is a long term option. However, there are pliable policies available that may fit your varying needs and some will allow you to repay in the future without any penalties. A financial adviser can help you to pick one that is right for you.
A mortgage is a loan taken out to buy property or land.
Most run for 25 years but the term can be shorter or longer.
The loan is ‘secured’ against the value of your home until it’s paid off.
If you can’t keep up your repayments the lender can repossess (take back) your home and sell it so they get their money back.
Although there are many different mortgages available, they can all be split into these categories.
Over the duration or term of your mortgage, every month, you steadily pay back the money you’ve borrowed, along with interest.
Over the term of your mortgage, you only pay off the interest. You you don’t actually pay off any of the mortgage. The monthly payments will be lower, but won’t lower the capital your debt.
Fixed Rate Mortgage
With a fixed rate mortgage, your lender guarantees your rate will stay the same ‘fixed’ for a set amount of time. Normally this guarantee is capped between 1–10 years.
Standard Variable Rate (SVR) Mortgage
SVR is a lender’s default. No deals, bells or whistles are included. Each provider is allowed to set their own SVR, and adjust it when they like.
Discounted Rate Mortgage
You get a discount on the lender’s SVR over a set period of time. This is a type of variable rate, so the amount you pay each month can change if the lender changes their SVR, which they’re free to do as they like.
They are sort of variable rate mortgages, which means you will probably pay a different amount to your lender each month. Tracker rates follow a particular rate to determine what you pay each month, then adding a fixed amount on top of that base rate.
Capped Rate Mortgage
These are variable mortgages, with a limit or ‘cap’ on how high the rate can rise. Often, the rate is higher than a tracker mortgage – so you might end up paying extra for that peace of mind.
When you sign up to your mortgage, the lender pays you a lump-sum of cash (usually, a percentage of your loan).
These allow you to overpay and underpay and even take a payment holiday (miss a few monthly payments) if required.
This is a way to use your savings to reduce the amount of interest you pay on your mortgage. You need to turn your mortgage into an offsets mortgage, open a current or savings account with your mortgage lender and link that account and your mortgage up.
With a Natwest mortgage, you need to use the money to raise funds to buy real estate, or alternatively if you’re an existing property owner you can raise funds for any purpose, while putting a lien on the property being mortgaged.
Note that mortgage plans are not right for everyone and it’s important that you fully consider your options and receive fair financial advice before making a decision. It’s also important that, if you do decide to use a Natwest Mortgage product, you choose one that meets your needs.
Remember that taking a mortgage is generally a long term option. However, there are many plans available that may fit your varying needs.
A financial adviser can help you to choose the plan that is right for you.
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