Our Later Life Lending Services

Would you like to unlock the money within your home to help you enjoy retirement?

If you’re 55 or over and own your own home, you could be eligible for equity release.

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How Does A Lifetime Mortgage Plan Work?

Just to explain, the value of your home, minus any mortgage or loan secured against it, can be described as your “equity”.

Later Life Lending plans such as lifetime mortgages and home reversion plans allow you to access this equity and turn it into cash.

If you already have a mortgage or loan secured against your property, some of the money you release through a lifetime mortgage must be used to pay this off, but the rest can be used for whatever you want!

And no monthly payments are required.

A lifetime mortgage is the most popular type of equity release for a number of reasons:

There is no obligation to make payments
The interest rate can be fixed for life
You continue to own 100% of your home, which means you will benefit fully from any future increase in its value
The plan is portable, so you can move house if you want to, subject to the lender’s lending criteria and associated costs

Additionally, when you consider a lifetime mortgage from a lender who is a member of the Equity Release Council, you will benefit from a no-negative-equity guarantee, which means that you will never have to pay back more than the house is worth. With a lifetime mortgage, the loan could increase to more than value of your home, but you will never have to pay anything after the home has been sold.

This is a lifetime mortgage. To understand the features and risks, please ask for a personalised illustration. Check that this mortgage will meet your needs if you want to move or sell your home or you want your family to inherit it. If you are in any doubt, seek independent advice.

Lifetime Mortgage Options

When the funds are received

With lifetime mortgages, there are two main options as to how funds could be drawn. This enables a longer term to be considered when the plan is arranged:

You could receive all of the funds on completion. This is commonly referred to as a ‘lump sum plan’, and interest would be begin to be charged from day one on all funds borrowed. This may be a good option for those who have imminent objectives for which funds will soon be required.

Alternatively, a ‘drawdown plan’ may be considered. This is where, as well as an initial lump sum, further funds would be placed in a reserve facility. These funds could then be drawn as and when needed, with interest only being charged when taken. The interest rate would be determined by the prevailing rate at the time of drawing. This may suit those who have plans in the longer term.

When the funds are repaid

Typically, lifetime mortgages and any associated interest only have to be repaid when you pass away or move into long term care. However, there are three options to consider when deciding whether to make payments back to the plan, to limit the amount repayable when the plan comes to an end:

You may not make any payments to the plan. In this case, interest would be added to the loan on a regular basis, until the plan ends. At that point, both the interest accrued and the funds borrowed would be repaid (generally from the sale of the property).

You may make repayments to the plan on an adhoc basis, when you have the capacity to do so. This may cover some or all of the interest, or even some of the capital. Any interest not repaid would be added to the plan periodically and would be due for repayment, with the borrowing, when the plan comes to an end.

You may decide to pay the interest in full on a regular basis (e.g.- monthly), ensuring that only the initial borrowing is repayable when the plan comes to an end.

What Are The Risks Of A Lifetime Mortgage Plan?

A lifetime mortgage will affect the amount you leave to love ones when you die.

A lifetime mortgage could affect your entitlement to means tested benefits, now or in the future, and can make moving house more complicated.

To understand all the features and risks, ask for a personalised illustration, and if you are interested in learning more about lifetime mortgages, simply get in touch. We’re here to help!

Who can apply?

To apply for a lifetime mortgage, you must be at least 55 years of age, a UK resident and own your own home.

Are there any repayments?

With most lifetime mortgages there is no requirement to make repayments.

How is the money paid back?

Typically, the money you release is paid back, in addition to any interest that has built-up, when the property is sold. This is usually when you pass away or move into long-term care.

How Does A Home Reversion Plan Work?

A home reversion plan works by you selling some or all of your home to a provider. How much you might receive is determined by your age, the value of your home, and in some cases your health.

Typically, the older you are, the more money you will be able to release.

In exchange for purchasing some of your property below its market value, the provider will give you the right to remain in your home rent-free until you die or enter permanent long-term care.

After that, your home will be sold and the provider will take their percentage of the sale value.

For example, if you sold 50% of your home, they will take 50% of the sale price.

Main Benefits Of A Home Reversion Plan

You can remain in your home for life
The money you receive is tax-free
You can retain a share of your home for inheritance purposes

Points To Bear In Mind:

You will not receive your home’s market value
It can be costly if you want to buy back the portion of your home
You will no longer be its sole owner

Additionally, were you to die soon after taking out the plan, your beneficiaries will miss out on a significant portion of your home’s value without you living to use it to your benefit.

How does a home reversion plan differ from a lifetime mortgage?

Home reversion plans are very different to lifetime mortgages. With a reversion plan, part or all of your home will belong to a company, although you retain the right to live there. With a lifetime mortgage, 100% of your home belongs to you. We are not authorised to provide advice on home reversion plan and will refer you to an authorised specialist, who can assist you in this area.

We're here to help!

If you would like to find out more about how our equity release solutions might be able to make your dreams come true, contact us today for a free, no obligation initial consultation*

Please note: Equity release may involve a home reversion or a lifetime mortgage, which is secured against your property. Property Wealth Advice are unable to advice on home reversion. To understand the features and risks, please ask for a personalised illustration. Check that this mortgage will meet your needs if you want to move or sell your home or you want your family to inherit it. If you are in any doubt, seek independent advice.

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