The Low-Down on Lifetime Mortgages

A Lifetime Mortgage is a form of equity release product that allows you to live in your home whilst enjoying a steady income stream from the equity in your home.  The lender gives the homeowner a loan based on the value of the equity tied up in the property. When the homeowners pass away or move into a care home, the loan is repaid with interest. This is a particularly good form of mortgage/loan product for senior citizens who do not have any heirs or do not plan to leave an inheritance.
                                 
Recently, as more specialist lenders brought flexible lifetime mortgage products onto the market, this has given customers more choice by making lenders compete for business.  As credit sources are closed off to senior citizens due to the Credit Crunch, lifetime mortgage products look like a much more attractive option.

During the length of the lifetime mortgage, ownership of the property remains with the homeowner, and there’s no chance that the lender will recall the loan, or try to take the property until the agreed time.  The property is safe throughout the term of the loan and no one will take the loan away from your inheritors when the loan term is up, it’s simply a legal agreement to pay back what’s owed and the interest accrued. 

Whilst in the early days of Lifetime Mortgages, there were some potentially shady dealers, the Financial Services Authority has worked hard to regulate and oversee lifetime mortgages and make sure that the product you get is standardized.

Lifetime Mortgage products are available for homeowners who no longer have a mortgage to pay.  Some of the Lifetime Mortgages are available to the over 50s, some are only available to the over 55s and 60s.  It’s important that you check which products are available for you.

The amount of loan available is dependent upon the age of the youngest borrower and the value of the property.  Whilst all lenders offer the loan as a lump sum, other choices such as drawn down and drawn down plus lump, allow staggered distribution of the loan.  There are no restrictions on what the money can be used for, so in your evergreen years you can take a dream holiday, visit family, treat your grandchildren or simply enjoy yourself, the money’s yours – why shouldn’t you get the most out of your home?

Lifetime Mortgages aren’t for everyone and there are other ways to raise money.  You should always ask a family member or friend to read over the terms and conditions with you and never make a decision without reading all of the small print. Make sure that your mortgage agreement includes a no-negative equity clause to ensure that you never owe more than the value of the property. Fees may apply for arranging the loan and the transfer of the lump sum.

Hanson Wealth have offices in Boldon, Durham, Inverness, Standish and North Berwick. We have a community of independent financial advisers based throughout Scotland, England, Wales and Northern Ireland as well as a variety of services available over the telephone or via the internet. So even if you are not based near to one of our branches, we can still ensure that you will get quality independent financial advice from our IFA team.

Call today on 0191 495 2254 or freephone 0800 881 8085

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