Lifetime Mortgages
A lifetime mortgage is the most popular form of equity release. It allows homeowners aged 55 and over to release tax-free cash tied up in their home. The amount of money you can release depends on things such as your age, health and the value of your home.
With a lifetime mortgage, you can take either a lump sum where interest accrues on the full amount from day one, or following an initial release you can have a cash reserve that can be accessed throughout retirement, known as a drawdown. This could save you thousands in interest if you don't need all the money straight away as you only pay interest on the amount drawn down.
There are typically no repayments to make with a lifetime mortgage, although many lifetime mortgages allow the option of making repayments, these are always optional. Any lifetime mortgage approved by the Equity Release Council will allow interest to be added to the loan on a compound basis over the borrower's lifetime with the balance becoming payable after death or exit into long term care.
Our adviser will personalise your plan to make it suitable for your requirements. For example, with some of our plans, you can choose to guarantee an inheritance for your loved ones through inheritance protection.
For added peace of mind, we can personalise your plan by adding optional features such as downsizing protection, so you can move home in the future if you need to, and/or with Inheritance protection, which allows a borrower to protect a fixed percentage of their property value to pass on to beneficiaries.
As with any mortgage, what remains from the sale of your property after your plan has come to an end can be passed on as an inheritance.
All of the plans we recommend are approved by the Equity Release Council who have standards that their members need to comply with. Which means you'll never owe more than your home's worth, so you can't pass on any debt accrued through equity release to your loved ones.
For more information, please call us today on 01622 618686 or email us at peter@psfsltd.co.uk
A Lifetime Mortgage will reduce the value of your estate and may affect your entitlement to means-tested benefits and tax status.
The impact of not servicing monthly interest payments on a Lifetime Mortgage is that the outstanding debt can grow rapidly, thus reducing the value of your estate.
For example, if the interest was 7% a year, a £50,000 loan would double to £100,000 after 10 years assuming no repayments are made.
This is an example for illustrative purposes only and personalised advice and recommendations should be sought from a qualified professional. You are strongly advised to register a lasting power of attorney. This will allow your affairs to be managed by somebody else if your mental abilities significantly decline
Lifetime mortgages are complex products. To understand the features and risks, ask for a personalised illustration.
Equity Release will reduce the value of your estate and may affect your entitlement to means tested benefits and tax status.
You are strongly advised to register a lasting power of attorney to mitigate the risks associated with managing financial affairs in the event of cognitive decline.