Our expert equity release advisers are always happy to explain how Lifetime mortgages work and answer any of your questions. Equity release is regulated by the Financial Conduct Authority (FCA), this means there are several guarantees in place to protect you and your finances.
Here are the most common questions that we are asked about equity release plans:
Q: “What will the monthly payments be?”
A: With most plans, there are no monthly repayments to make. This is because the loan, plus interest is rolled up (compounded) into the loan. The loan plus the interest is repaid when the plan comes to an end. This may be when you (and any other applicant) either pass away or move into long-term care. The total amount owed will usually be paid from the sale of your property. An exception to this is if you take a Lifetime mortgage with the option to make interest payments.
Q: “Can a Lifetime mortgage be used to pay off my existing mortgage?”
A: Yes. The money released from your Lifetime mortgage will first be used to repay your existing mortgage. The difference is then yours to spend. Remember that this is a tax-free lump sum.
Q: “Can I lose my home?”
A: You will not lose your home when you choose a Lifetime mortgage. As members of The Equity Release Council, we only recommend plans that give you the right to remain in your home for as long as it remains your main residence. Additionally, we only recommend plans with a “No Negative Equity” guarantee. This means that you will never owe more than the value of your home.
Q: “Can I move to a new house after taking out a Lifetime mortgage?”
A: Yes. With a Lifetime Mortgage, you can move to a new home. Normally, you will be offered two choices. Repay the outstanding amount owed plus any early repayment charges. Or, you transfer your Lifetime mortgage to another suitable property without any financial penalty. Each provider has its criteria, so you should check this out before taking out your plan.
Q: “Will my estate be affected by equity release?”
A: When you pass away or move into long-term care, your property is sold and the money is used to repay your equity release plan. This will reduce the value of your estate.
Any equity taken out of your property will reduce the amount of inheritance you can leave your beneficiaries. You can request Inheritance Protection which allows you to leave a fixed percentage of your home’s value to your beneficiaries.
You will never owe more than the value of your home and any money left over is returned to your estate.
Q: “How is equity release regulated?”
A: Equity release is fully regulated by the Financial Conduct Authority (FCA). As a company, we are also authorised and regulated by the FCA. Our registration number is: 577360
To take out an equity release plan, you must take specialist advice.
As members of The Equity Release Council, we adhere to their standards.
Q: “Can I repay my Lifetime mortgage early?”
A: Lifetime mortgages are a long-term financial commitment. You will have the option to replay your Lifetime mortgage, but you may incur an early repayment charge. Some plans will allow you the option to repay the mortgage early and choose fixed early redemption penalties over a certain time frame.
Interest payment plans enable you to make monthly repayments on the loan, or you have the option on some plans to make voluntary partial repayments. This is usually up to 10% of the capital.
Please speak to your equity release adviser before going ahead, if this is something that you are interested in as these features are not common with all plans.