Lifetime Mortgages

What is a Lifetime Mortgage?

A lifetime mortgage is a form of “Equity Release” mortgage in which you don’t give up ownership of your property.

With a Lifetime mortgage, you can get out from under your house’s debt. The market value of your property less any outstanding mortgage or other debt secured against it is known as equity. If you’ve lived in your house for a long time, local house values have undoubtedly risen gradually, so the amount of equity you currently have might be rather large.

‘Equity release’ refers to receiving a portion of this money out of your house and into your pocket without having to sell up and move out. You may live in your own home for the rest of your life or until you enter long-term care.

A lifetime mortgage is an investment in your future. It’s a smart move that will make you money over the long term. In this article, we’ll explore what a lifetime mortgage is and why it can be such a great deal for homeowners. Ready to invest? Read on!

IMS Independent Mortgage Solutions may be able to assist you in accessing funds tied up in your home if you are a UK homeowner over the age of 55.

The top 5 reasons to release equity from your home

The top 5 reasons for releasing equity from your home are usually:

  • To pay off an existing mortgage
  • To fund garden/home improvements
  • To boost income
  • To fund holidays and large purchases
  • To gift early inheritance or used as part of Inheritance Tax Planning

You may decide to set aside a portion of the value of your property as an inheritance for your family.

Many insurance providers might be able to provide larger benefits for those who have certain medical problems or ‘lifestyle factors,’ such as a smoking habit.

The home still belongs to you and you’re responsible for maintaining it.

Interest is charged on what you have borrowed, which can be repaid or added to the total loan amount.

When you die or move into long-term care, the home is sold and the money from the sale is used to pay off the loan.

Everything else is sent to your beneficiaries. They may pay off the mortgage without having to sell the home if your estate can do so.

If the sale does not produce enough funds for your beneficiaries, they will be required to reimburse any additional than the value of your home beyond what was paid.

Different types of Lifetime Mortgages

Interest Roll-up Mortgage

An Interest roll-up mortgage is a type of mortgage in which you receive a lump sum or are paid a regular amount, and the interest on it is added to the loan. This means you don’t have to make any additional payments. When the property is sold, the borrowed money, plus any rolled-up interest, is repaid.

We’ll always work to find you a lender with a “no negative equity guarantee,” which means that when the property is sold, you won’t owe more than what the property is worth.

Interest-paying mortgage

With an interest-paying mortgage you get a lump sum and make either monthly or ad-hoc payments. This reduces or stops, the impact of interest roll-up. Some plans also allow you to pay off the capital, if you so wish. The amount you borrowed is repaid when your home is sold.

You can also decide whether you want the money as a lump sum or whether you want it to fund an income.

How to Qualify

You must be 55 or older and have a UK home worth at least £70,000 to qualify for equity release. The minimum age, property value, and housing criteria differ among providers

How can IMS help you with a Lifetime Mortgage

We can assist clients with a range of retirement-oriented loans. Although some lenders will refuse to grant mortgages in retirement, we have connections with numerous lenders that will not only allow this but also provide reduced rates!

The majority of people aim to be mortgage-free throughout their retirement years, but there are several reasons why you might want to borrow money that lasts until or even beyond your working years.

  • Do you want to purchase an investment property to top up your pension income?
  • Do you want to release equity to fund home improvements/help loved ones on the property ladder/fund a once-in-a-lifetime holiday / consolidate debt?
  • Are you nearing the end of your current interest-only mortgage and have no means to repay it?

Whatever the cause, we have the experience and knowledge to assist you to discover the best solution for your demands.

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