Lifetime Mortgage Equity Release

Published / Last Updated on 17/05/2021

Here we explain Lifetime Mortgages

What is a lifetime mortgage?

  • It is a mortgage debt on your home.  

How does it work?

  • This is an interest roll-up scheme.
  • You release equity and interest is charged each month to the debt.
  • Think of it like a credit card that you never pay back.

Do I have to make payments?

  • No, interest rolls up over the years.
  • Some schemes will allow you to make payments after a period if you wish to stop the amount you owe increasing.

Is my home safe?

  • You have the permanent right to live in your home until the day you die or sell your home or move or go into a care home

How much equity can I release?

  • You usually set an amount, usually it will be no more than 50% of the value of property.  Most people release smaller amounts than this

Who are lifetime mortgages suitable for?

  • If you need flexibility to sell, move, or have more money later

Can there be negative equity?

  • If you live for a long time, the debt will mount up. 
  • We work on the basis that every 10 years the debt doubles. 
  • Whilst this may sound drastic, do not forget that your home may go up in value
  • Ask yourself how much your house was worth 10 or 20 years ago and you may feel better
  • If negative equity did occurr, most schemes have a no negative equity guarantee, in short you are still safe to remain in your home

What sort of interest rates?

  • Interest rates are usually similar to normal mortgage rates and usually around 1% higher
  • There are both fixed and variable interest rates

Can I release more later?

  • We usually recommend schemes that have the flexibility to some funds out today and release some more in the future
  • There is little point releasing the whole amount and being charged interest, if you do not need it all today.

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Introduction to Three Types of Equity Release

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