Lifetime Mortgage

Lifetime Mortgages are currently the most popular type of equity release scheme in the UK. The information below provides an overview including the advantages & disadvantages of these schemes.


The different types of lifetime mortgages are illustrated opposite & give you an insight into the options available within this product range.

Summary

Lifetime mortgage plans enable you to raise a tax free lump sum at a fixed interest rate, which is then added to the loan; monthly or annually.
The two types of lifetime mortgages are the 'roll-up' scheme, where no monthly payments are made, and the interest only lifetime mortgage plan, where the interest charged can be repaid.
Each option offers the security for the owner to retain 100% ownership of the property.
You have the right to remain in the property for the rest of your lives and the plan is repaid when the property is sold, which usually occurs when you die or enter long term care.



Advantages

Plans are available from age 55 to age 95 You will benefit fully from any future increase in property value Option of fixed interest rates for the lifetime of the planFlexibility of borrowing additional funds in the future Inheritance protection guarantees can protect a portion of your estate for your family

Disadvantages
The Lifetime Mortgage balance will compound over timeYour tax position and eligibility for means-tested benefits may be affected A lifetime mortgage usually cannot raise as much as a reversion planEarly repayment charges may applyYour beneficiaries may receive a reduced inheritance

 

 


 

 

 

Further Lifetime Mortgage Information

Over recent years the equity release market has undergone significant changes. We have seen a swing away from home reversion schemes over to lifetime mortgage plans that now offer more flexibility & choice than ever. Follow this link for the latest lifetime mortgage rates.

 

Drawdown Lifetime Mortgage

Lifetime mortgages now account for the majority of all equity release schemes applied for with the most popular scheme being the ‘drawdown lifetime mortgage’. By harvesting a cash reserve facility, the planholder can take an initial capital sum, followed by future ad-hoc withdrawals whenever the time suits. The advantage being you are only charged interest on the amount actually withdrawn.

 

Interest Only Lifetime Mortgage

A recent innovation and one growing in popularity is the 'interest only lifetime mortgage', which has seen a significant rise recently as more people look to maintain mortgage borrowings through retirement. With good income to service the interest charged, you can repay the interest and/or capital to stop the normal roll-up effect of the interest. This maintains a level or reducing balance.

 

Enhanced Lifetime Mortgage

Finally, should ill-health persist, then an ‘enhanced lifetime mortgage’ could be of interest. Upon completion of a health & lifestyle questionnaire & subsequent actuarial underwriting, can determine the size of the loan granted. Effectively, the more severe your condition, the greater the lifetime mortgage amount that will be offered.

 

Further information on these three lifetime mortgage UK plans can be found opposite or by calling

 

'the complete equity release service'
 
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