Lifetime Mortgages give you the chance to release the thousands of pounds that are tied up in your property and can help you enjoy a more restful and secure retirement. They can be used for anything from topping up pension funds to using the added income to give you an all round better standard of living.
If you and your partner are aged 55+, and you are a homeowner then you could be permitted to take out a lifetime mortgage and borrow a cash lump sum from the equity within your home. The total equity you’re able to release will be dependent on your age and what your property is valued at. According to one industry expert, the over 65’s have around half a trillion pounds in unmortgaged equity tied up in their homes, so equity release may be an option for this age group.
In the current financial climate, lifetime mortgages are becoming increasingly popular but it wasn’t so long ago when many older homeowners weren’t sure about lifetime mortgages because they were led to believe that you had to surrender ownership of your home.
This isn’t true-you release a share of the equity in your property whilst continuing to be the sole homeowner for the duration of your lifetime. Another benefit of this is that if house prices rise during your loan period you’ll continue to profit from your property’s increase in value. At the time of writing, lifetime mortgages are the most popular types of plans in the UK, and for good reason, as the money you release is tax-free.
Lifetime mortgages are secured against your home but you don’t have to make regular repayments or pay back the mortgage during your lifetime because the amount of equity released belongs to you in the first place. The money you that you borrow plus any interest that is accrued is repaid from the proceeds of your property once it is sold when you move into residential care or pass away.
Providers should also be able to provide you with a no negative equity guarantee which means that you will never have to pay back more than the market value of your home, regardless of what happens to house prices in the future. This simply means that you can never transfer any debt to your loved ones when you pass away. Of course, the inheritance you will leave will be significantly affected, which is why you should always talk it over with your loved ones initially and also seek independent advice from an expert before proceeding with any equity release plan.
