What Is a Lifetime Mortgage?

You are property rich but cash tight. You’ve benefitted over the years from the increasing property prices, but without cash flow, you are severely limited in what you can do.

You’ve got time to do the things you’ve also wanted to do, but you can’t, because all of your money is tied up in your property.

Imagine that you could do that renovation, get that perfect car or go on that dream holiday.

There’s a way… and still stay in your property.

It is called equity release, and it’s booming in the UK. You’ve seen it on the TV, heard about it on the radio, and you’re not the only one. Every 12 minutes, someone over 55 in the UK released equity from their property. Let’s take a more in-depth look at what it’s.

It is a financial product that enables homeowners who are 55+ to unlock the value in their home by turning it into a lump sum or regular income.

Unlike traditional mortgages, with equity release programs, you don’t have to make any monthly repayments, and they allow you to continue residing in your residence until you pass away or move into permanent care. Only then is your plans customarily repaid from the sale proceeds of your home.

If you’re over the age of 55 and a homeowner, you’re almost certainly eligible. What you release isn’t taxable, and you have the financial freedom to use it on what you want – meaning you get to tour the world, give an inheritance to your family and enjoy your golden years.

You’ve always waited for the moment to do what you want when you want. Now you can have the funds to do that.

When comparing the policy, a specialist adviser  will explain:

• You have to get advice before freeing equity.
• Check for plans that have a guarantee so you can’t be liable for more than your house is worth.
• It reduces the value of your estate.
• The initial consultation is free.
• The most known form is a lifetime mortgage, which is a loan secured against your home. Note that you will still own your home.

Lifetime Mortgage is an ideal option for anyone looking to enhance their lifestyle after retirement, and here are some of the ins and outs.

1. It Offers You Financial Freedom

By taking out plans, you can use to spend your money as you want. Whether you need to upgrade that kitchen, make home changes like adding new double glazing, loft & cavity wall insulation, a world tour, or to help your kids buy their first home, it’s all up to you.

What you receive is tax free, and you can opt to take it as either a lump sum, as an income or in several smaller chunks (‘drawdown’) – thus giving you more flexibility.

2. It Does Not Require You to Downsize

You do not get to experience the hassle, inconvenience, and expense of moving out of your treasured family home. It provides you the financial freedom you need but also the freedom of choice.

3. It Provides the ‘No Negative Guarantee’

It means that it protects you from having the debt due from being driven up by house price changes. Therefore, your beneficiaries cannot ever incur any debt over & above the market value once the mortgage holders die or placed into permanent care.

Lifetime mortgages are equity release products that offer you capital by turning the equity tied up in your home into a lump sum or monthly income. However, equity release also includes the home reversion plan.

The difference between the two mortgages is that with the lifetime mortgage scheme, you retain ownership of your home. In contrast, with the home reversion, you sell a percentage or all of your estate to the plan provider – meaning you lose the right to claim the part of the property sold.

You are free to use the money on almost anything you want. There are many reasons for having equity released from your home and here are a few of them.

Common 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 delight their inheritance while you are still here
• Top up your income in retirement
• To take that holiday of a lifetime
• To help your children onto the property ladder
• To pay off other outstanding balance and lower your monthly outgoings.

Well, there’s no maximum age limit for getting the lifetime mortgage plan. However, you have to be aged 55 to apply for a loan.

Lifetime Mortgages are not right for everyone and it’s imperative that you fully consider & understand your options, and receive independent financial advice before you make a decision. It’s also important that, if you do decide to use an equity release product, you select one that meets your needs.

Remember that taking it’s generally a longer term option. However, there are flexible plans available that may fit your varying needs and some will allow you to repay it in the future without any penalties. A financial adviser can help you find a plan that is controlled by the financial conduct authority and that will work for you.

Chat with an adviser to get the best equity release advice, answer all your questions, and see how much you can release now. Use our equity release calculator now.

An lifetime mortgage could be a great way to help you live your later life to the full.

By borrowing a tax-free lump sum you could be able to fund improvements to your home, help younger family members get on the property ladder, or simply keep your lifestyle in retirement.

How much you can borrow is based on a number of factors, including your age, the type of property you own, and its value.

You aren’t required to settle your lifetime plan during your lifetime unless the last surviving owner moves out permanently.

Alternatively, you may have a considerable lump sum available and want to settle your plan so that you can include your home in your will.

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.

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.

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.