Lifetime Mortgages For Pensioners
Getting a lifetime mortgage as a pensioner
If you are an older homeowner, looking for ways to raise capital to enjoy your retirement you may be wondering what lifetime mortgages might be available to you. Lifetime mortgages are a type of equity release scheme that allows you to access some of the value of your home without having to move.
Speak to us today to discuss the latest lifetime mortgage schemes on 0117 313 7780 or complete our request callback form.
If you would like to speak to a Fair Mortgages advisor you can fill in the online contact form to request a call-back for a free initial consultation. Fair Mortgages is a whole of market adviser who has access to a variety of mortgages from a including a range of specialist lenders that borrowers cannot apply for directly one of which might present the best choice of mortgage for you.
How lifetime mortgages for pensioners work
With a lifetime mortgage, you take out a loan secured against your home based on a percentage of its market value, if you are still making repayments for an existing mortgage you can still take out an equity release mortgage on the equity you own. You continue to own the property but sign an agreement with the lender that the sum you borrowed, and any interest that has accumulated on the property will be repaid when you either die or move into permanent care.
Most of the lifetime mortgages available can be broken down into three categories:
Roll up: With this type of equity release you will not incur any monthly or annual interest repayments. Instead everything will be repaid through the eventual sale of your home. It is important to consider with this kind of plan however that as the interest that accumulates on the loan is compounded the debt can increase considerably quickly.
All plans registered with the Equity Release Council carry a ‘no negative equity guarantee’, meaning that your estate cannot be charged anymore than the eventual sale value of your home, even if that is much less than the accumulated debt.
Interest-only: With this kind of plan you have the option of making monthly repayments on your loan to cover some of the interest that accumulates on the loan. The original sum you borrowed however will still be paid off from the eventual sale of your home
Fixed repayment: This option does not operate on an interest basis, instead during the application process you will agree with the lender the exact amount they will be repaid through the eventual property sale.
Minimum age: Many lenders have a minimum age limit for their equity release products, often 55 or 60. As a general rule the older you are the more you will be able to borrow.
Property type and value: Lenders may be unwilling to offer their products for owners of certain types of property which they feel are at risk of slipping into negative equity. It may also be difficult for properties such as flats.
Advantages of lifetime mortgages:
- Allows you to access some of the value of a property without having to move
- Maintain the ownership of your property, it may even be possible to move to a different property as long as the lender gives their approval
- Equity Release Council approved plans offer a guarantee against negative equity
- Many plans don’t require you to make repayments until the eventual sale of the property.
Disadvantages of lifetime mortgages:
- Equity release will reduce what you can leave behind to your beneficiaries
- The interest rate is usually higher than that of a conventional mortgage
- You may need to pay arrangement and valuation fees as well as legal costs
- If you want to repay your lifetime mortgage before the end of its contract you will most likely have to pay early repayment charges.
If you want to find out more about equity release plans, you can complete our equity release form or get in touch with a Fair Mortgages Adviser directly.
You can either fill in our online contact form to request a call-back for a free initial consultation, or you can call directly on: 0117 313 7780.
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