Lifetime mortgages are not appropriate for everyone. For some however, being able to release capital or income from their home can be a huge blessing.
The amount of borrowing is age related to the youngest applicant, usually a minimum of 55 and the loan is repaid on death (or second death if a joint mortgage) or should you move into a nursing home on a permanent basis.
There are no restrictions as to how you spend the money, it’s your choice.
With some of these schemes the interest which accrues on the amount borrowed will be ‘rolled-up’ and on sale of the property, death or moving into a nursing home the total amount of the loan plus any interest accumulated will be paid back to the lender. You can choose to repay the loan back early, however there may be penalties in doing so.
The drawbacks to lifetime mortgages need to be understood and explored. For example, if you are on State Benefits, by releasing equity from your home the amount of Benefit you are entitled to could alter. Your Income Tax position may change, or as the loan is repaid on death, there will obviously be an effect on your Estate and the Inheritance which your beneficiaries are expecting.
Because of the complexity of a Lifetime mortgage, you should discuss your requirements with an appropriately qualified independent mortgage adviser.
When choosing the Company to provide your loan, for your protection, we recommend that you use a member of The SHIP Code of Conduct (Safe Home Income Plan) :
1. Members of SHIP agree to provide a fair, simple and complete presentation of their plans. The benefits, obligations, variables and limitations must be clearly set out in their literature, including all costs which the applicant has to bear in setting up the scheme, the position on moving home, the tax situation and the effect of changes in house value.
2. All SHIP plans carry a 'no negative equity' guarantee, which means that you will never owe more than the value of your home.
3. The client's legal work will always be performed by the solicitor of their choice. In all cases prior to the completion of the plan, the solicitor will be provided with full details of the benefits the client will receive. The solicitor will be required to sign a certificate to the effect that the scheme has been explained to the client.
So, do you think Equity Release is for you? Talk to an independent mortgage adviser and find out.
To ask Carol a question or arrange a consultation please use the form below to get in touch.
This is a Lifetime Mortgage. To understand the features and risks, ask for a personalised illustration.
There may be a fee for advice. The precise amount will depend upon your circumstances but we estimate that it will be £1,000.
Author Biography
Carol Brown Cert CII(MP & ER) has worked in the Financial industry for over 20 years. Over this period her career has taken a course through banking, running a high street Estate Agency, heading up a conveyancing team and working alongside Financial Advisers in a large National Insurance Company. As an Independent Mortgage Broker, Carol will ensure that the product recommended is the most suitable for your needs and circumstances.
The Financial Services Authority does not regulate some forms of mortgages. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP YOUR REPAYMENTS ON YOUR MORTGAGE. Please note that there may be variations for those living in Scotland and Northern Ireland. The actual rate available will depend upon your circumstances. Ask for a personalised illustration.
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