If you’re thinking of taking out a Lifetime Mortgage, having the key facts to hand will help you make an informed decision about whether it is right for you. As well as talking to an experienced Bower adviser, reading this helpful guide will give you important information you need to get started.
Yes, Lifetime Mortgages are available to those who have already paid off their mortgage. In fact, not having a mortgage will increase the money you can release from your home as you will not need to use any of it to pay off an existing mortgage.
Lifetime Mortgages are the most popular type of Equity Release product and are generally available to homeowners over the age of 55 who have a home that is worth more than £70,000.
The money you release with a Lifetime Mortgage can be used for many things, from home improvements to holidays and cruises or to fund retirement. You may also decide to help family members by giving them a cash gift from the money you have released. It is generally your choice what you do.
You can usually take out a drawdown facility whereby you are set a maximum amount you can borrow but only ‘draw-down’ what you need when you need it, normally a minimum amount £2,000 upwards, depending on the lender.
Interest is only charged on the amount you take meaning that the amount owed rises less quickly.
Whilst Lifetime Mortgages are the most popular type of Equity Release product, there are other ways to release funds in your home. A Home Reversion plan is a type of Equity Release plan that involves selling all, or part, of your home to a lender with the assurance that you can live in the property for the rest of your life. However, you will not receive the market value of your property or the part you sell. There is no interest on this type of plan, however the provider will own your home, or a percentage of it. Your property will be sold after you pass away or go into long term care which is the way the lender will recoup the loan amount.
You could also opt for a Retirement Interest Only (RIO) mortgage, which was approved by the FCA in 2018, however it is not a type of Equity Release plan. You would have to pay the interest charged every month, which keeps the final payable loan amount down. It also only needs to be paid upon your passing or if you move into long-term care.
Whatever type of Equity Release product you are interested in, it is important to speak to a Bower adviser today. With experience, knowledge, and trust, we can help guide you towards the right product for you, so you can enjoy your retirement however you choose.
