Lifetime Mortgages
Lifetime Mortgages are a form of Equity Release, designed to help you borrow money that is secured against your residence.
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Is a Lifetime mortgage right for you?
A Lifetime Mortgage is an equity release product. Put simply, equity is the value of your home minus any debts secured against it, such as a mortgage or other loans. An equity release product allows you to convert some of your home’s value into cash without having to sell and move out.
Lifetime mortgages are so called as they are designed to last for the whole of your lifetime. They allow you to borrow money against the value of your home, while still owning it.
Criteria for a Lifetime Mortgage
To check if you are eligible for the Lifetime mortgage scheme, see our points below.
You must be at least 55 years old
Your house is worth at least £70,000
You own your own home
You have insufficient income at retirement and minimal savings
Your house is in the UK
You want to borrow at least £10,000
When a Lifetime Mortgage may not be suitable…
It is always best to speak to your financial adviser to see what type of mortgage is best suited to you.
Different types of Lifetime Mortgages
Lump Sum
This allows you to release a lump sum with no requirement to make any payments until the loan is repaid. Interest is added to the loan, with the total debt and the accrued interest payable when the property is sold.
Drawdown
This enables you to borrow a smaller initial sum and then agree an amount that you can borrow in the future as needed. Interest is only charged on the amount you have taken and the interest rate is based on the interest rate at the time of each drawdown.
Interest Serviced
Here, you can make monthly payments of all or some of the interest and so reduce the effect of accrued interest on the total amount borrowed.
How much does it cost to have a Lifetime Mortgage?
As with other mortgage products, there are a series of initial costs involved in the process of taking out a lifetime mortgage. You also need to take into account that with a lifetime mortgage you will have an ongoing interest rate on your loan.
Costs associated with lifetime mortgages:
Valuation Fee – To cover the cost of an independent valuation of your property
Completion Fee – To cover the lenders costs of setting up the loan
Legal Fees – Your solicitor’s fee for providing independent legal advice
Financial Adviser Fee – Your adviser may charge you a fee for their advice. At your first meeting your adviser will confirm how much the fee will be and when it is payable.
Other Fees – You may be charged a fee if you make changes to your plan such as borrowing more, moving home or changing the names of the borrowers.
Early Redemption Charge – This may apply if you pay off the loan early.
- A lifetime mortgage is not suitable for everyone and may affect your entitlement to means tested benefits, so it is important to seek financial advice before taking any action. If you are considering releasing equity from your home, you should consider all options available before equity release.
- The interest that may be accrued over the long term with a Lifetime Mortgage, may mean it is not the cheapest solution. As interest is charged on both the original loan and the interest that has been added, the amount you owe will increase over time, reducing the equity left in your home and the value of any inheritance, potentially to nothing.
- Although the final decision is yours, you are encouraged to discuss your plans with your family and beneficiaries, as a Lifetime Mortgage could have an impact on any potential inheritance. We would also encourage you to invite them to join any meetings with your Financial Adviser so they can ask questions and join in the decision, as we believe it is better to discuss your decision with them before you go ahead.
- A lifetime mortgage is not suitable for everyone and may affect your entitlement to means tested benefits, so it is important to seek financial advice before taking any action. If you are considering releasing equity from your home, you should consider all options available before equity release.
- The interest that may be accrued over the long term with a Lifetime Mortgage, may mean it is not the cheapest solution. As interest is charged on both the original loan and the interest that has been added, the amount you owe will increase over time, reducing the equity left in your home and the value of any inheritance, potentially to nothing.
- Although the final decision is yours, you are encouraged to discuss your plans with your family and beneficiaries, as a Lifetime Mortgage could have an impact on any potential inheritance. We would also encourage you to invite them to join any meetings with your Financial Adviser so they can ask questions and join in the decision, as we believe it is better to discuss your decision with them before you go ahead.
Contact a Financial Adviser
Fill out the form below or call us on 01299 821 160 and we will be in touch regarding your enquiry!
The internet is not a secure medium and the privacy of your data cannot be guaranteed. Your details will not be stored on our database and therefore will not be used for marketing purposes.
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Email: advice@eurekafs.uk
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Eureka Financial Solutions Ltd is an appointed representative of The Openwork Partnership, a trading style of Openwork Limited which is authorised and regulated by the Financial Conduct Authority. Eureka Financial Solutions Ltd is registered in England number 11567337. Approved by The Openwork Partnership on 30/03/2023.
The information on this website is subject to the UK regulatory regime and is therefore targeted at consumers based in the UK. No representations are made as to whether the information is applicable in any other country which may have access to it.