Voluntary Repayment Lifetime Mortgage

How Does a Voluntary Repayment Mortgage Work?
Contributors: Nicola Date, Katherine Read. Edited by Rachel Wait & Reviewed by Francis Hui
What’s a Voluntary Repayment Lifetime Mortgage? Learn What the Benefits Are, the Repayment Options & if It’s the Right Plan FOR YOUR NEEDS

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Would you like to discover the world of voluntary repayment lifetime mortgages?

Look no further!

What You’ll Learn in This Article:

    After careful consideration, unbiased professional advice, and by checking out this lifetime mortgage manual, you will finally understand what are the pros and cons of choosing this plan in 2022.

    Let’s take a look.

    What Is a Voluntary Repayment Lifetime Mortgage?

    A voluntary repayment lifetime mortgage is a type of equity release scheme that allows you to reduce what’s owed at the end of the loan by paying back some of the interest and loan, when you have the means to do so.

    How Does an Optional Partial Repayment Plan Work?

    With a voluntary repayment lifetime mortgage, you have the option to reduce the final loan amount, and stop the interest from compounding, by paying some of it off when you have the means to do so.

    It’s available for homeowners over 55, with a property value that’s at least £70,000.

    As with all types of lifetime mortgages, the loan and interest balance is repaid when you pass away or enter long-term care.

    What Are the Benefits of a Voluntary Repayment Lifetime Mortgage?

    The main benefit of a voluntary repayment lifetime mortgage is that you reduce the amount of equity that’s owed from the sale of your home when you pass away or enter long-term care.

    By paying interest, you also prevent the amount from compounding.

    Before You Keep Reading….

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    Repayment Strategies: All the Options

    With regular changes occurring in the equity release market and alterations made in how you can manage your future equity release balance, most brokers4  are initiating several repayment strategies. They include:

    #1. Making Interest-Only Repayments

    With an interest-only plan, you can effectively maintain a level balance of your loan, thus safeguarding the equity value in your estate and any inheritance you wish to pass on to your beneficiaries.

    #2. Utilising the Maximum Repayment Allowance

    This allows you to repay not only the interest but also a portion of the equity too. If your lender allows, you can choose a 15% voluntary repayment strategy, and get to repay the whole balance within 8-9 years!

    #3. Making Irregular Repayments

    The fantastic thing about these optional partial repayment schemes is that you aren’t obliged to make any monthly repayments,

    and they can be efficiently switched ‘on or off’ as you wish.

    If you think this plan is for you and you want to see how much you can release, be sure to use our voluntary repayment estimator to get an idea of how ad hoc repayments could work for you.

    How Much Can You Borrow?

    The amount you can borrow with a voluntary repayment lifetime mortgage will depend on your age, your property value, and sometimes the condition of the home.

    Further criteria may include the annual interest rate and the yearly repayment plan you choose.

    Breaking News

    As of 31 March 2022, the Equity Release Council announced that all new lifetime mortgage plans will come with the option of guaranteed repayments.

    Common Questions

    Can You Make Payments on a Lifetime Mortgage?

    Can A Lifetime Mortgage Be Paid Off Early?

    Can You Refinance a Lifetime Mortgage?

    What's The Interest Rate On A Lifetime Mortgage?

    In Conclusion

    The voluntary repayment plan can come in handy when you are looking for financial freedom, while continuing to own 100% of your asset.

    It’s time to enjoy your retirement.

    If you need more information on lifetime mortgage plans and voluntary repayment lifetime mortgages, be sure to click here and see how much equity you can release and chat with an expert.

    Before You Go…

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