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Some providers allow you to move home with their lifetime mortgage plan so that you can avoid early repayment charges. If the new property is valued lower, you may have to repay part of the mortgage.
A few lifetime mortgage products have the option to have a pre-approved cash reserve facility for future borrowing needs. No additional financial advice is required in most cases as the facility is set up at the start and advice is given at that point.
Some lifetime mortgage products offer you the option to pay all or some of the interest each month. This gives you greater control over whether your mortgage balance increases or stays at the same amount. Also, you may be allowed to make capital repayments towards the mortgage and reduce the debt as well. There are strict rules for proving income and passing lending criteria with retirement mortgages, both repayment and interest only. The main difference with RIO mortgages is that the term isn’t fixed. You pay the interest each month until you die or move into long term care
Most of the time, lifetime mortgages have fixed interest rates for the total loan duration. If you take out additional borrowing or drawdown against a cash reserve facility, the rate will also be fixed for the duration but it will be determined by the existing rate at the time you apply for the additional borrowing or drawdown. However, the equity release company won’t get its hands on anything until the property is sold, whether that is when you pass away or move into long term care. The amount the company offers to you will be well below the share’s actual value. For example, a 20% advance means surrendering 70% of your property’s value. The lender takes a larger share of your property, as they lend an initial amount and then have to potentially wait a long time before they see their money back.
With a lifetime mortgage, the loan is usually paid when your property is sold in the event of your death or you move to long-term care. Your beneficiaries can retain ownership of the property by repaying your lifetime mortgage from their own resources or a new mortgage in their own names.
Almost all lifetime mortgage plans offer a no-negative guarantee. This means when the property is sold and your proceeds are not enough to pay the amount owed, including the essential fees, you or your beneficiaries will not be asked to pay the shortfall.
Some lifetime mortgage products allow you to protect a part of your property value from the start of the loan term. The percentage protected is guaranteed to be available on the sale of the property to you or your beneficiaries.
Quite a few lifetime mortgage providers offer a waiver which means that in the case of joint borrowers, an early repayment charge will not be payable if you decide to repay the mortgage in the first few years of the first borrower dying or going into long-term care.
A few lifetime mortgage plans offer downsizing protection which means you're able to repay the mortgage without penalty if you're moving to a smaller property.
As long as you abide by the terms and conditions of the lifetime mortgage, you will always: • Retain ownership even if the rolled-up interest exceeds the value of your property • Have complete control • Be responsible for maintaining your property • Be able to live in your property until you die or go to long-term care
Because we play by the book we want to tell you that...
1. We understand equity release isn’t for everyone, and we’ll never say it’s the right option for you, that’s why we pass you onto an Expert.
2. A lifetime mortgage is a loan secured against your property. With a lifetime mortgage there are typically no monthly repayments to make as the loan, plus roll up interest, is repaid when the plan comes to an end. Usually, that’s when you, or the last remaining applicant, either passes away or moves into long-term care.
3. With a lifetime mortgage you’ll still retain full ownership of your home.
4. Equity release will reduce the value of your estate and may affect your entitlement to means tested benefits.
5. Mortgage Advice Bureau Later Life offer lifetime mortgage products from a carefully selected panel of providers.
6. Unless you decide to go ahead, Mortgage Advice Bureau Later Life’s service is completely free of charge as their fixed advice fee of £1,295 would only be payable in completion of a plan.
7. ClearKey is an independent marketing website which only acts as an introducer to companies who offer advice on various financial plans, products and services.
8. Our partners are authorised and regulated by the Financial Conduct Authority.
9. ClearKey.co.uk are not authorised to give any advice and we are not liable for any financial advice provided by or obtained through a third party.
10. Life insurance products attract terms and conditions. Price information contained within this website are for illustration purposes only. You will receive a full policy document upon application which will set out the terms, conditions and limitations of cover provided under the plan.
11. Your home may be at risk if you do not keep up repayments. Think carefully about securing debt against your home. When consolidating existing borrowing be aware that extending the term could increase the amount repaid.