Lifetime Mortgages

Life Time Mortgages

A Lifetime Mortgage is a mortgage where you are not required to pay back the loan until the house is sold, or you go into residential care. They are usually available for people over 55.

There are three types:-

Interest only. You are required to make payments of interest to the lender monthly.
Interest roll-up. The mortgage is interest only, however you make no payments to the lender. The interest charged is rolled up into the loan. With this form of Lifetime Mortgage, the debt increases over time.
Home Income Plan. Here your mortgage is used to buy an annuity (insurance policy), which provides a fixed income for life. The interest rate is fixed, and the annuity is used to make the interest payments to the lender monthly, the surplus being used as an income for you.

The advantages and disadvantages of Lifetime Mortgages:-

Lifetime Mortgages Advantages:-

You retain ownership of your property.
You can use the case as you wish.
No monthly payment plans available.
You are guaranteed lifetime occupancy.
Any remaining equity left after the sale of the property is available for beneficiaries.

Lifetime Mortgages Disadvantages:-

If you are younger, the amount raised by the mortgage will be a relatively low proportion of your property value.
The debt could roll up quickly, and reduce the value of the equity. This could lead to lower amounts for beneficiaries. This is more likely to be the case if you are younger.
You have no control over the rate of interest.
Moving home could prove difficult.
Increases in your capital or income from a Lifetime Mortgage may affect your right to state benefits.

YOUR EQUITY RELEASE