Lifetime Mortgages
Lifetime mortgage schemes are generally aimed at those over the age of 55, who have little or no outstanding mortgage, and are offered by a number of lenders.
Lifetime Mortgage Quote
How a Lifetime mortgage works
You must be aged 55 or over
Maximum of two applicants
You will have to prove your age, for example with a birth certificate
or pension book
You will have to prove that you own your home (your solicitor
will do this for you)
Loan size
Minimum £10,000
Maximum £Negotiable
The amount that can be borrowed depends on your age (or the age of the youngest applicant, if there's two of you) and the value of your property, up to a maximum of 55% of the property's value.
Lifetime Mortgage Lump sum drawdown - (Available
through some lenders only)
If you don't want to take the whole amount offered to
you at the beginning, you can apply for the rest as a cash drawdown
facility. With most lenders the drawdown facility will be restricted
to ten years, but it is possible to a rrange a lifetime mortgage
that provides a drawdown facility for life. Future withdrawls are
usually limited to a minimum of £2000
or more for each individual drawdown. With some lenders this can
be at no additional cost. The amount of drawdown required must
be declared when the Lifetime Mortgage Application
is completed.
Further loan
As you get older lenders are happy to lend a bigger
percentage of property's value. To take advantage of this, you
can apply for a further loan generally after 12 months. In most
circumstances a further lifetime mortgage loan arrangement fee
is charged as well as a valuation fee for revaluing the property.
Loan term
The loan will have to be repaid a maximum of 12 months after
your death or the death of the last surviving of you if it's
a joint mortgage. If you (or both of you, if it's a joint mortgage)
are no longer able to live in your home or the property ceases
to be your main residence, you will also have to repay the
loan.
Fixed rate
Generally Lifetime mortgages / Equity release mortgages come
with a rate that is fixed for the entire mortgage term. Interest
accrues monthly and is added to the loan until the loan is
repaid.
Moving home
If you want to move home after taking out a Lifetime mortgage,
most lenders will allow you to transfer it to your new property,
subject to you and the property satisfying the lending criteria
at the time. But if you're moving somewhere cheaper, you may
have to pay back some of the loan.
Other occupiers
Any other persons over the age of 17 who will occupy the property
after completion must sign the appropriate consent forms waiving
any rights they may have over the property.
Insurance
You must arrange your own property insurance and make sure that
it meets the lenders requirements.
Solicitor
You will need to instruct a solicitor to act on your behalf.
Licensed conveyancers will not be acceptable when arranging a
Lifetime Mortgage / Equity Release mortgage. Some lenders may
require you to pay elements of their legal costs.
Things to remember
The Lifetime mortgage really is intended to last a lifetime -
it will only be repaid when you (both of you if it's a joint
mortgage) die or leave the property. So it's vital that you
talk it all over with your mortgage adviser or solicitor, to
make sure it's the right scheme for you. We also suggest that
you discuss it with your family or the people who will inherit
your estate in the event of your death.
You won't have to make any payments on your mortgage, but interest will be added at a rate which is fixed for the entire mortgage term which means that the amount payable upon a repayment event such as death, will be more than the amount you borrowed. Interest will be charged on accumulating interest which means that the amount of the loan will increase faster than it would on a normal mortgage when interest and/or capital repayments are made.
With lifetime mortgages there is a 'no negative equity guarantee' which will ensure that the most you will ever owe is the value of the property. You will need to ensure that your property is maintained to a reasonable standard so not to reduce your property's value. A reduction in the property's value due to poor maintenance could mean the loss of the 'no negative equity guarantee'.
When recommending a Lifetime Mortgage lender, we always ensure that they are a member of Safe Home Income Plans (SHIP), which means that they have to follow its code of practice and give you a fair, value for money mortgage. For more information on SHIP, call 0870 241 6060.
THIS IS A LIFETIME MORTGAGE. TO UNDERSTAND THE FEATURES AND RISKS,
ASK FOR A PERSONALISED ILLUSTRATION.


