What is a Lifetime Mortgage?
Lifetime Mortgage products are for people over 60 and a homeowner. A Lifetime Mortgage can help free up part of the value of your house, without risk to your home and without any repayments if you choose.
Lifetime mortgage products allow you to mortgage your home by release equity but it does not suit everyone. Lifetime mortgage lenders can now help you release equity with a specially designed lifetime mortgage for homeowners like you. It can help you free up part of the value of your house, without risk to your home and without any repayments if you choose. You may even move home during the term with some providers.
Do you pay Anything each Month with a Lifetime Mortgage?
With most lifetime mortgages, there are typically no repayments required while the borrower is alive. However, it's important to note that the unpaid interest on the loan is added to the balance, which can cause the debt to increase over time. This is known as interest roll-up or compound interest and can cause the amount owed to grow quite quickly. It's crucial for borrowers to understand the potential long-term effects of compound interest when considering a lifetime mortgage and to seek professional advice to determine if it's the right choice for their individual circumstances.
Your home may be repossessed if you do not keep up repayments on your mortgage
Do all Equity Release Mortgages have Rolled up Interest?
While most traditional lifetime mortgages operate on an interest roll-up basis, there are a few options available that allow borrowers to pay some or all of the interest, and some let you pay off the interest and capital. These options can help reduce the impact of compound interest and ensure that the amount owed does not increase as quickly over time. However, it's important to note that these alternative options may come with different eligibility criteria and may not be suitable for everyone.
Is there an Alternative to an Equity Release Mortgage?
There are alternatives to lifetime mortgages that may be worth exploring. In recent years schemes such as retirement interest only or home revision mortgages have become popular. If you have any questions about RIO mortgages or other mortgages, please feel free to ask.
We are not authorised to give advice on lifetime mortgages, if you require advice we will refer you to a Financial Advisor who is qualified in Lifetime mortgages.
If You are interested in more information on Lifetime Mortgage schemes please complete the mortgage enquiry form and a Lifetime mortgage specialist will contact you.
Lifetime Mortgage Risk Warning
A Lifetime Mortgage will reduce the value of your estate and may affect your entitlement to means-tested benefits and tax status.
The impact of not servicing monthly interest payments on a Lifetime Mortgage is that the outstanding debt can grow rapidly, thus reducing the value of your estate.
For example, if the interest rate was 7% a year, a £50,000 loan would double to £100,000 after 10 years assuming no repayments are made.
This is an example for illustrative purposes only and personalised advice and recommendations should be sought from a qualified professional. You are strongly advised to register a lasting power of attorney. This will allow your affairs to be managed by somebody else if your mental abilities significantly decline.
