older couple talking about lifetime mortgageThe Financial Conduct Authority (FCA) recently estimated that there are around 2.6 million people with interest-only mortgages in the UK. These figures excluded buy-to-let mortgages. A lifetime mortgage may be the answer for some?

To help with this mortgage companies are coming up with some creative solutions. For many, equity release is still the best and most flexible solution.

So what is equity release?

First of all, Equity release can be split into two subcategories. Home Reversion plans and Lifetime mortgages. Most people who take out equity release use a lifetime mortgage. This is a way for you to release money from your home without having to move. It can be seen as a loan that is secured against your home.  The money released is tax-free. You can take the money all at once or in smaller amounts, as and when you needed it.

What repayments do I have to make?

With a lifetime mortgage, you will not have to make any monthly repayments. Interest is added to the amount you owed each month. This means interest is charged on the loan plus any interest already added. This is known as compound interest. In practice the amount owed will go up quickly over time, reducing the equity left in your home. Some lenders allow you to make optional monthly repayments which are designed to reduce the interest payments.

Any age limits?

These mortgages are available to people aged 55 or over. Due to the effect of compound interest taking out a loan later in life can look more attractive. Releasing funds from your home could affect you obtaining new or existing State Benefits. We would always suggest that if you are thinking about taking out a lifetime mortgage that you talk it through with your family.

How is a lifetime mortgage repaid?

The lifetime mortgage is usually repaid from the sale of your home when the last surviving borrow dies or goes into long-term care. If you decide to repay the lifetime mortgage before this there may be early repayment charges.

What can I do with the money?

Equity Release Council logo for lifetime mortgageYou have no restriction on what you do with the money. The money is tax-free. Popular choices are-

  • Repaying outstanding interest-only mortgage and debts
  • Helping family. Children and grandchildren
  • Helping to pay, day to day bills.
  • In-home care.
  • Divorce or dissolution.

The list is endless.

How we can help you with a lifetime mortgage?

Entering into an equity release plan could change your life for the better, but it is a long-term financial commitment. It is vital you take professional independent financial advice. We are Independent Financial Advisers and members of The Equity Release Council. To find out if a lifetime mortgage is right for you why not contact us today.

A meeting can be arranged at a time that is convenient for you and your family. This could include weekends.

We are following Government advice so no matter how coronavirus (COVID-19) is affecting you, we are still able to assist. So, no need to visit an office as all work can be undertaken remotely. This may be by-arrange a call back logo for a lifetime mortgage

  • Phone
  • Facetime
  • Zoom
  • Skype

We also have offices located at-

  • Kettering, Northamptonshire
  • Stamford, Lincolnshire
  • Towcester, Northamptonshire
  • London, Central London.

Finally, our financial advisers also make use of meeting rooms in Northampton, Thrapston, Market Harborough and Bedford.

Financial Conduct Authority

These products are lifetime mortgages or home reversion plans. Equity released from your home will be secured against it.