The term “Equity Release” describes a wide range of products which are only available to people aged over 55. Equity Release products are split into two broad categories: Lifetime Mortgages and Home Reversion Plans. At Bob Little & Co Ltd, we only provide advice and information relating to Lifetime Mortgage products.
A Lifetime Mortgage allows you to release some of the capital tied up in your home (that is, the equity) without selling your home. The money you release can be used to fund a more comfortable lifestyle in retirement, whether you want to raise a lump sum or increase your other retirement income.
How does a Lifetime Mortgage work?
A Lifetime Mortgage works in a similar way to a normal mortgage product. This means you apply for a mortgage amount and your selected provider will decide how much they are willing to lend to you. The amount you can borrow will depend on various factors including your age, the value of your property and the provider’s own rules.
One key difference between conventional mortgages and Lifetime Mortgages is the mortgage term. Conventional mortgage terms are often set at a maximum of 25, 30 or 35 years and most lenders no longer allow a mortgage product to run into your retirement. In contrast, Lifetime Mortgages have no fixed term. The mortgage is designed to be repaid in full when you (and your partner) eventually pass away or move into long-term care.
A second key difference relates to mortgage payments. Under a conventional mortgage, a mortgage payment is typically due each month, whereas under a Lifetime Mortgage you can choose whether or not you wish to make a payment each month. If you choose not to make a mortgage payment each month the payments will instead be added to your outstanding mortgage. This means the amount you owe will increase over time.
Is a Lifetime Mortgage suitable for me?
Lifetime Mortgages are not suitable for everyone, particularly people who do not wish to hold a mortgage or people who receive state benefits. It is important to explore other options before you consider a Lifetime Mortgage, such as moving to a smaller home or using other available savings. However, Lifetime Mortgages can be very suitable for certain people, particularly those who require a lump sum or an income to improve their standard of living in retirement and who have no other assets apart from their home.
If you are interested in finding out more about Lifetime Mortgages please contact us and ask to speak to an adviser. We will arrange a free initial consultation where you can find out more about these products and whether or not they might be suitable for you. Our advisers understand that these meetings can often be quite complex, so great care will be taken to ensure you are satisfied at each stage of the advice process.
A Lifetime Mortgage represents a significant financial decision, so we always advise our clients to discuss their options thoroughly with their family before making any final decisions. We also encourage clients to bring family members with them during any meetings with an adviser, so that any queries or questions can be answered immediately.