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Did You Know? Every 12 minutes a homeowner over 55 in the UK unlocks £91,667 untaxed cash.
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A mortgage is a loan taken out to buy realty or land.
Most run for 25 years but the terms 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 payments the lender can repossess (take back) your home and sell it so they get their money back.
Natwest Mortgage Calculator – get a Natwest mortgage quote and chat with an adviser to learn more.
Although there are many different mortgages available, they can all be split into these main categories.
Over the period 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 reduce the capital you owe.
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 free 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 kind 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 a kind 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 (skip 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 offset 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 is important that you fully consider your options and receive independent financial advice before making a decision. It is 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.
Our Most Commonly Asked Questions
When comparing the reverse mortgage3 market, a specialist adviser will explain:
- You have to get adviced before releasing equity.
- Check for schemes that have a no negative equity4 guarantee, so you will never owe more than your home’s value.
- It reduces the value of your estate.
- The initial consultation is without charge and with no obligation.
- The most popular form is a lifetime mortgage, which is a loan secured against your home. Note that you will still own your home.
A reverse mortgage is a way of releasing the wealth (cash) tied up in your home without the need to move.
With reverse mortgage products, if you are over 55 yrs, you can either borrow against the value of your home or retail all or part of it for a routine monthly income, a lump sum, or the facility to get and when you like or a combination of these options.
Use our free reverse mortgage loan calculator to see how much you can release now.
Although there are many different schemes available, they can all be split into four main categories of reverse mortgage schemes.
Lifetime Mortgage Loan
You release a lump sum from the value of your house, by taking out a mortgage (provided it is your main residence) whilst maintaining 100% ownership of your home. This amount, plus any interest accrued, (you can opt to make payments) is repaid from the sale, when you pass away or move into long-term care.
Drawdown Lifetime Mortgage
This works similar to Lifetime Mortgage but with a regular cash reserve/draw down option enabling you to withdraw amounts at a frequency you choose up to a specified amount of years, or until the cash reserve has been used up.
Interest-Only Lifetime Mortgage
You get a lump sum and settle a monthly interest on the loan, which can be fixed or variable, rather than allowing the interest to roll up. The amount you originally loaned is normally repaid when your home is eventually sold.
Home Reversion Plan
Here, selling some or all of your house to home reversion providers in exchange for a lump sum of money or payments, whilst maintaining the right to remain living in your home, uncharged rent , for as long as you live, but you have to agree to maintain and insure it. At the end of the plan your it is sold and the sale proceeds are shared according to the remaining proportions of ownership.
Not Looking For a Reverse Mortgage?
You can use the money on almost anything you like. There are many reasons for releasing cash from your home and here are just a few of them.
Common Reverse Mortgage Uses:
- To supplement your pension income to cover living expenses
- To settle a mortgage or clear the balance on an interest-only mortgage
- To improve your way of living
- To see your family enjoy their inheritance while you’re still here
- To carry out some home improvements
- To take that holiday off
- To help your children onto the property ladder
- To clear off other outstanding debt and lower your monthly outgoings.
Use our reverse mortgage calculator to see how much you can release now.
Reverse mortgage plan are not right for everyone and it is important that you fully consider your options and receive independent financial guidance before making a decision. It is also important that, if you do make the decision to use this product, you choose one that meets your needs.
Remember that taking a reverse mortgage is a long terms option. However, there are pliable schemes 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 choose the plan that is right for you.
Use our reverse mortgage calculator to see how much you can release now.
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