With a lifetime mortgage you continue to own your home completely and are given a loan based on your age and the value of the property. You can pay the interest charged monthly or have the interest rolled up into the loan amount – this means there would be no monthly payments.
A lifetime mortgage is a type of mortgage that allows you to borrow money against the value of your home, without having to make any monthly repayments. Instead, the loan and any accrued interest are paid back when you die or sell your home.
With a lifetime mortgage, you continue to own your home and can live in it for the rest of your life, but the lender will have a charge on your property. The amount you can borrow will depend on your age, the value of your home, and your health.
It’s important to understand that a lifetime mortgage can have a significant impact on the amount of inheritance you leave to your loved ones, as the loan and interest will need to be repaid from the proceeds of the sale of your home. It’s also important to seek independent financial advice and consider all the options available to you before making a decision.
Some further details about lifetime mortgages:
- Interest rates: Lifetime mortgages typically have a fixed interest rate that is higher than the standard variable rate for traditional mortgages. The interest is added to the loan amount, which means the amount you owe will increase over time.
- Equity release: A lifetime mortgage is a type of equity release product, which means you are releasing some of the equity (value) tied up in your home. Other types of equity release products include home reversion plans and retirement interest-only mortgages.
- Eligibility: To be eligible for a lifetime mortgage, you typically need to be over the age of 55 and own a property worth a certain amount. Some lenders may also take your health and other factors into account.
- Repayment options: Some lifetime mortgages offer flexible repayment options, such as allowing you to make voluntary repayments or setting a limit on the amount of interest that can be added to the loan. It’s important to understand the repayment options before taking out a lifetime mortgage.
- Protection: The Equity Release Council (ERC) is a trade body that sets standards for equity release products. If you take out a lifetime mortgage from a lender that is a member of the ERC, you will have certain protections, such as a no-negative equity guarantee, which means you will never owe more than the value of your home.
- Independent financial advice: It’s important to seek independent financial advice before taking out a lifetime mortgage. An independent financial adviser can help you understand the costs, risks, and benefits of the product, as well as alternative options that may be available to you.