With a lifetime mortgage, you take out a loan secured on your home with no fixed term that allows you to stay in your home for the rest of your life, unless you have to move into long term care. There are different types and costs.
This mortgage may be:
A roll-up mortgage (this is where interest is added to the loan - for example each year - rather than you making any regular payments). You get a lump sum or regular amount and are charged interest which is added to the loan. This means you do not have to make any regular payments. The amount you originally borrowed, including rolled-up interest, is repaid when your home is eventually sold.
A fixed repayment lifetime mortgage. You get a lump sum, but do not have to pay any interest, instead a repayment amount is agreed in advance which is higher than the lump sum. When the home is sold, you have to pay the lender the higher amount.
An interest only mortgage. You get a lump sum and pay a monthly interest on the loan, which can be fixed or variable, rather than allowing the interest to roll-up. The amount you originally borrowed is repaid when your home is eventually sold.
When taking out a lifetime mortgage, you can choose to borrow a lump sum or instead go for a drawdown facility. You may even be able to take a combination of these to meet your individual needs. The flexible or drawdown facility is suitable if you want to take regular or occasional amounts, perhaps to top up your income, rather than one big loan, as it means you only pay interest on the money you actually need.
As with a conventional mortgage, you borrow money secured against your home. The home still belongs to you. Interest is charged on what you have borrowed, which you either pay or, more typically, allow to roll-up on top of the loan. When you die or move out, the home is sold and the money from the sale is used to pay off the loan. Anything left goes to your beneficiaries. If there is not enough money left from the sale to pay off the loan, your beneficiaries would have to repay any extra above the value of your home from your estate. To guard against this, most lifetime mortgages offer a no-negative-equity guarantee. With this guarantee the lender promises that you (or your beneficiaries) will never have to pay back more than the value of your home – even if the debt has become larger than this.
Taking out an Equity Release product may affect your ability to claim social security benefits, and may also affect your tax (including any council tax benefits) position. If you are worried about this and need further advice you should contact HM Revenue & Customs, The Pension Service, your local Citizens Advice Bureau or your Financial Adviser.
A Lifetime Mortgage reduces the value of your estate, and the amount that will go to your beneficiaries on your death.
A Life Time mortgage involves borrowing against your home. There may be more suitable methods of raising the funds you need.
We will charge an initial non refundable fee of £1,000 and we will also recieve commission from the lender once the mortgage has completed.