How do lifetime mortgages work?
In some ways, a Lifetime Mortgage works in a similar way to a normal mortgage product.
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.
The money you release is not liable to income tax or other taxes. It can be spent however you wish.
Common Questions
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 do not have a fixed term. Instead, 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 due each month.
In contrast, 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 interest will be added to your outstanding mortgage. This means the amount you owe will increase over time.
- You are not required to make repayments. This means the loan plus interest can grow very quickly.
- The money you release from your home could affect any means-tested benefits you’re entitled to now or in the future.
- The money you release is paid back after you die, from your estate. This means the size of your estate, and the amount you can pass on to your loved ones, could go down.
- The money you release from your home is a loan, and interest will be repaid when you die or if you move into long-term care.
- There are various costs associated with Lifetime Mortgages, including advice fees, product fees, and legal fees. Your adviser will explain these fees in detail at your free initial meeting.
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 this topic can 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. You are welcome to bring a trusted family member or friend to any meetings with an adviser.
Our Fees
We offer a free, no obligation, initial meeting. This gives you an opportunity to find out more about our company and to get to know your adviser.
You are welcome to bring a trusted family member or friend to the meeting, if you wish to do so.
After your initial meeting your adviser will set out how we can help you and what fees will be payable for our services. If you choose not to use our services, no fees will be payable.
We set different fees for different types of work, which is explained in more detail on the link below.
