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.