Many older homeowners find that a large proportion of their wealth is tied up in their home. A Lifetime Mortgage is a type of equity release plan, available to homeowners aged 55 plus, which enables you to release a lump sum of tax-free cash or regular extra income from the value of your property to spend however you choose:
- Increase your retirement income
- Pay for that holiday of a lifetime
- Provide a deposit for your children or grandchildren to buy their first home
Types of Lifetime Mortgage
1. Lump Sum Lifetime Mortgage
A percentage of the value of your property is taken in tax-free cash.
2. Flexible Drawdown Lifetime Mortgage
This type of plan allows for the option of a cash reserve from which you can drawdown sums as and when needed until the reserve has been used. An initial lump sum can be taken and then sums from as low as £2,000 can be taken at any time. These plans offer greater flexibility because you do not pay for any cash releases until you need it.
With these 2 plans there are no regular payments to make as the amount that you have released, plus any interest, is repaid from the proceeds of the sale of your property. Generally this is when you die or move in to long-term care. Anything left over goes to your beneficiaries.
3. Interest Only
With this type of plan the amount borrowed against your property remains the same for the duration of the plan, as interest is paid monthly. This way you and your family will always know how much is owed when the decision is made to sell the property.
Benefits of a Lifetime Mortgage
- No monthly repayments (unless you opt for an interest only plan)
- You can remain in your own home for as long as you choose
- You retain ownership of your home and will benefit from any future increases in its value
- ‘No negative equity’ guarantee
Lifetime Mortgage Advice
Taking professional advice is essential if you are considering a Lifetime Mortgage. We will refer you to our associate company, The Right Equity Release Ltd, who will discuss your needs and help you decide if a Lifetime Mortgage is suitable for you. For further information on Lifetime Mortgages please contact us.