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Lifetime Mortgages

A lifetime mortgage is a loan secured against your home. You don’t have to make any repayments but some providers give you the option to do so. The loan and the interest doesn’t have to be paid back until you die or go into long term care.

What are the benefits?

  • You receive a cash lump sum to spend on whatever you want.
  • You still own your home and continue to live in it during your lifetime or go into long-term care.
  • A ‘no negative equity’ guarantee means neither you nor your estate will have to pay back more than your home is sold for, as long as this is for the best price reasonably obtainable.
  • Some plans offer an optional inheritance guarantee that allows you to ensure that an inheritance will be left. However, it should be noted this will reduce the amount you are able to borrow.

What are the considerations?

  • You don’t have to pay tax on the amount you release, but it may affect your overall tax position and entitlement to welfare benefits. Your specialist will review this with you.
  • If you choose to end the plan early some plans include substantial early repayment charges. Your specialist will review all the available plans should this be a concern.
  • If you make no monthly repayments, interest is charged on the total amount borrowed and the interest already added. Obviously, this will increase the amount you owe and reduce the value you have in your property.
  • Some plans allow you to repay the interest which is attractive to those borrowers who wish to leave more for their children or other loved ones in the future. Paying all the interest due means the loan will be no greater than the amount you have borrowed and this is all that would be repayable from the sale of your home on your death or entering long term care.

Drawdown Plans

Drawdown lifetime mortgages work in the same way as general lifetime mortgages but with added flexibility.

After taking an initial release amount you can then choose to ‘drawdown’ further cash in stages as and when you want to. The interest is only added on the amount released so it adds up more slowly than it would if you released the full amount at outset. This is a flexible option and can form an essential part of planning your future finances.

Enhanced Plans

If you or your partner have any health or lifestyle conditions you may be able to release more money from your home.

Health issues such as diabetes, heart problems or high blood pressure are typical examples where you could qualify for an enhanced equity release plan. The same also applies to lifestyle factors such as heavy smoking. You may miss out on thousands if you choose an adviser who cannot advise on this.

Protected Plans

If you want to guarantee an inheritance for your family, this is now possible with some lifetime mortgages.

For example, a couple who are able to release £50,000 and want to ensure their grandchildren are left with an inheritance could take £30,000 (60% of the maximum available) leaving 40% of the property ‘protected’.

Combined Plans

Flexibility within lifetime mortgages means you could benefit from the many available options to not only save your estate money but also tailor your plan to your current and future needs.

For example: If you want an inheritance for your family and need lump sums over the next 15 years, you may be able to have a protected plan with a drawdown facility.

Retirement Line do not provide an equity release service. If you are at all unsure of which options suit you, we can refer you to an independent equity release specialist.

Call us now to arrange a meeting with an equity release specialist on 0800 652 1352.

 

What's next?

Retirement Options

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