Lump sum lifetime mortgages are just one of the options you could consider when it comes to equity release. Coming with different advantages and disadvantages, it’s important to look at each product carefully and speak to a specialist equity release adviser to learn more about your suitability and the implications this may have on your current circumstances.
Our equity release advisers offer whole of market advice, working closely with you and your family to find the best option for you and answer your questions along the way.
What is a lump sum lifetime mortgage?
Whether you’re looking to repay a mortgage, second charge or loan, make some home renovations, purchase a new car, or simply go on holiday, equity release allows you to access tax free cash stored in your home. A lump sum lifetime mortgage allows you to do this as a single tax-free lump sum.
A lifetime mortgage is secured against your home and will not need to be repaid until you pass away or move into long term care.
How does it work?
A lump sum lifetime mortgage with provide you with a tax free lump sum when your agreement begins. Once you and your equity release adviser has agreed which product is suitable for your circumstances, you’ll need to submit an application. Your adviser will help you through this process. If this is approved, the lender will deposit the lump sum into your chosen account once all of your paperwork is complete.
Your loan and interest accrued will then be repaid once you pass away or move into long term care. If you’re looking to for an equity release product, it’s important to seek financial advice so you can be matched with the most suitable product.
What are the advantages and disadvantages of a lump sum lifetime mortgage?
The advantages:
- You will still own your home and can continue to live there until you move into long term care or pass away
- You’ll have a no negative equity guarantee, meaning you and your family will not owe more than your properties value
- You won’t need to make monthly repayments as the interest and lump sum will be paid off after you move into long term care or pass away
- You will not pay tax on the equity you release
The disadvantages:
- Your entitlement to means tested benefits may be affected
- If you wish to release further funds you will need to submit an application which may be denied. A drawdown lifetime mortgage gives you access to further funds
- If you wish to repay your lump sum lifetime mortgage early, you may have to pay early repayment charges although some plans have overpayment options
- The value of your estate will be reduced, leaving you and your family with less money and reduced money for long term care
What is the difference between a lump sum and drawdown lifetime mortgage?
With a lump sum lifetime mortgage, you’ll receive your cash as a single lump sum, in comparison, a drawdown lifetime mortgage will give you an initial lump sum with the rest of your funds stored in a cash reserve facility to withdraw at a later date anytime you wish.
Learn more about which type of equity release is right for you
Try our free equity release calculator to see how much equity you could release from your home today. Alternatively, request a callback from our specialist advisers today.
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 £1,695 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.
