A lifetime mortgage is becoming an increasingly more popular option for some people looking to release money from their property, whilst still being able to continue to live in the house or flat.
When you apply for a lifetime mortgage you’re securing money against your property in order to release a lump sum of cash. This can help maintain your lifestyle or assist your children with their first steps onto the property ladder. You retain the ownership of the property whilst you are alive, providing you don’t need to go into care. The property must be your main residence to be applicable for a lifetime mortgage.
When you eventually pass away or go into care, the property is sold to repay the loan, however family members could decide to retain the property and pay to clear the loan against the property.
If you or your family decide to sell the property and repay the secured loan then they will inherit the remaining funds.
Types of Lifetime Mortgages
There are a couple of different types of lifetime mortgages. Your adviser will be able to discuss all the positives and negative of these secured loans alongside which type of mortgage may be best for your circumstances.
The two types of lifetime mortgage you could consider are:
- Interest Roll-Up Mortgage: You receive a sum of money in one payment or a consistent monthly amount. Interest is charged to the loan every time a payment is made and the total amount is due to be repaid when you sell your property.
- Interest-Paying Mortgage: You receive a set amount of money and make monthly or sporadic payments. By paying money towards the loan you’re reducing the amount of money owed when the property is sold.
Lifetime Mortgages: Release Equity From Your Property
You should always seek professional advice before entering into a lifetime mortgage. There are positives and negatives to the mortgage and we would be happy to discuss these with you so you’re in a position to make an informed decision about your financial future.
If you would like to discuss potentially releasing equity from your property with a lifetime mortgage, then please get in touch today. You are under no obligation to proceed with any recommendation we make and we will give you all of your options.
A lifetime mortgage is a long-term commitment which could accumulate interest and is secured against your home. Equity release is not right for everyone and may reduce the value of your estate.