Lifetime mortgages have become the most popular equity release scheme in the equity release marketplace and are intended to last for the remaining lifetime of the homeowner(s). The homeowner’s age and property value are used to calculate how much money can be borrowed and that amount is secured against the homeowner’s property. The cash received can be used in any way the homeowner chooses and there are a variety of features that can be tailored to suit the homeowner’s individual needs.
There are a number of variations of lifetime mortgage schemes but the most standard version of this product does not usually require repayments against the loan balance. This means that you, the homeowner, would receive a lump sum payment and the interest would simply roll-up and compound on a regular basis. However, there are variations of this product that allow for repayments to be made, if you choose to make them. In every case, the full loan balance is repaid when the home is finally sold, which typically takes place when the final remaining homeowner either passes away or moves into permanent long term care.
Many homeowners choose to take advantage of a lifetime mortgage product in order to better enjoy retirement. This could mean keeping the cash on hand for an unforeseen expense or spending it on enjoyment. The cash received can be used on any expense including traveling, paying down debt, or giving gifts to children or grandchildren. Other benefits of a lifetime mortgage include being able to keep 100% ownership of the property as well as potentially safeguarding a percentage of the property for your beneficiaries.
In order to qualify for a lifetime mortgage, you must be at least 55 years old and must have a property worth a minimum of £60,000. Your health and lifestyle will also be taken into account. If your health is poor, you are most likely eligible to receive a higher lump sum payment.
Lifetime mortgages now provide a number of unique features, which has contributed to their increase in popularity, and there are new features being introduced regularly. There are a number of payment options now available as well as enhanced features for certain demographics. To understand the features available to you, it is important to speak with a specialist adviser who can help you determine the best product for your individual situation.