If you are thinking about taking out a Lifetime Mortgage, the most popular type of Equity Release plan, you might be wondering about making payments to the mortgage. . Lifetime Mortgages can release funds tied up in your home for use during retirement. These funds can be used for a number of reasons and will not need to be paid back until after you pass away or need to move into long-term care. In this article, we’ll look into the repayment terms in more detail so you have all the information you need to make an informed decision.
This money is loaned to you in a lump sum, or series of lump sums, by an Equity Release lender, who is then paid back upon your passing or if you enter long-term care, usually from the sale of your house. The executors of your estate will inform your lender of your passing and organise the sale of the house or other assets to pay back your loan.
Most Lifetime Mortgages have the facility for you to make optional monthly interest repayments. If you opt for an interest payment Lifetime Mortgage, you pay off your interest monthly, which will ensure the balance of the loan stays the same.
You can pay back a Lifetime Mortgage, but because it is seen as a long-term plan, there may be an Early Repayment Charge (ERC), which can be considerable. Any potential early repayment charges are fully explained before you take out the plan.
If you want to release equity from a home with a Lifetime Mortgage, you will be required to pay it back with funds that have been released. Any money left over after the mortgage has been repaid will be yours and you will be able to spend it however you like.
At Bower, we will understand your unique circumstances and advise you to ensure you are receiving the best plan to meet your objectives. There are plans that allow you to make voluntary repayments and move home, subject to lender criteria. However, early repayment charges may apply in certain circumstances.
Equity release requires paying off any existing mortgage. Any money released, plus accrued interest to be repaid upon death, or moving into long-term care. Equity release will reduce the value of your estate and your entitlement to means-tested benefits now or in the future, and impact long-term care funding.
Bower Home Finance provides independent, impartial whole of market advice with an award-winning customer service experience. Initial advice is provided at no cost to you and without obligation. Only if you choose to proceed and your plan completes, would a typical advice and administration fee of £1,495 be payable.
If you are considering equity release, we strongly recommend that you read our equity release page carefully and talk to one of our specialists before deciding if you wish to proceed.
To find out more about any of the products and the service we provide, please call us on freephone 0800 411 8668, request a call back, email us, or join our live chat you’ll find on our website.
Please be aware that equity release may involve a home reversion plan or lifetime mortgage which is secured against your property. All features and risks are thoroughly explained in your free personalised illustration.
