During our conversations with clients we get asked a variety of questions so we thought it would be helpful to put these into a fact sheet to help people who are considering if a lifetime mortgage could be appropriate for their situation.
If once you have read this you are interested in having a conversation, please contact us to speak to a qualified equity release adviser. We provide equity release advice and have access to plans across the whole of the market. We can identify if equity release is right for you and provide you with a tailored recommendation.
Did you know a lifetime mortgage could be used to:
- carry out home improvements or adaptions.
- help your loved ones access some of their inheritance early.
- fund holidays and travel.
- purchase a second home or help buy a new property for you to live in.
- repay an existing mortgage or secured loan.
- boost your retirement income.
Who is eligible for a lifetime mortgage?
- Applicants must be 55 years and above.
- The property must be your main residence.
- You must own your property, or use funds to buy one.
- The property value must be £70,000+.
How much equity can you release using a lifetime mortgage?
- It depends on your age and property value.
- Typically, the older you are, the more you can release.
- Some lifetime mortgage lenders will increase the amount available based on your health and lifestyle.
Canada Life are a lifetime mortgage lender and have produced a useful customer guide, Click Here to learn more!
Things you should consider before applying for a lifetime mortgage
A lifetime mortgage requires paying off any outstanding loans or mortgages secured against your home. You may be able to include the money required for these in the amount you release.
The money released and any interest accrued is repayable on death or if you leave your home and move into long term care.
It’s possible that extra funds made available to you by a lifetime mortgage could affect your entitlement to any means-tested state benefits, which you may receive now or in the future.
A lifetime mortgage isn’t suitable for everyone in all circumstances, so it’s important that you speak to a qualified equity release adviser before making a decision.
It may be worth considering whether your reason for releasing equity is essential or whether there are other ways to secure the money, such as:
– A personal loan
– Taking in a lodger – to find out more Click Here
– From a family member
– A local authority grant – Click Here to see if there are any grants available to you
– A traditional mortgage
– Moving home / downsizing
– Using existing savings / assets / pension savings
Key features of lifetime mortgages
- You can make payments on a committed or flexible basis, subject to certain limits. Doing so reduces the total amount to be repaid but early repayment charges may apply above a set value. Alternatively, you may decide to make no payments and allow the interest to accrue and compound over time.”
- You can remain in your home for life.
- You can include equity protection, to ensure equity is available for you or your beneficiaries in the future although this may limit the amount that you can release.
- With the No Negative Equity Guarantee, your estate will never owe more than your property is worth when it is sold, provided it is sold for a fair market value and you have kept to the terms and conditions of your lifetime mortgage.
- A lifetime mortgage will reduce the value of your estate and impact your ability to fund long-term care in later life.
- Funds can be taken in stages throughout your lifetime.
- Medically underwritten plans could reduce the interest rate or increase the amount you borrow through a lifetime mortgage.
The Equity Release Council represents the equity release sector and exists to promote high standards of conduct and practice in the provision of and advice on equity release which have consumer safeguards at its heart. To find out more about the equity release council Click Here.
Harbour Equity Release – here to help you every step of the way
Our objective is to find the right solution for you, there is no obligation to proceed and if equity release isn’t your best option we’ll let you know. The following is a step by step process of releasing equity from your home.
Customer research
Our customers often start by researching equity release online to find out as much as possible about how it works and what the options are. Please take a look at our Insights page to help with your research.
Fact finding
Advice is mandatory for equity release. We will perform a fact find to understand your situation, needs and priorities. We will also explore whether any alternative options may be viable and determine whether equity release is the right solution for your needs.
Exploring your options
After we’ve gathered the relevant information, we spend time researching the plans available across the whole of the market to find the best solution available to suit your personal circumstances.
Our recommendation
We will issue you with our recommendation, talk you through the reasons why a plan has been recommended and provide you with a personalised illustration, which explains the features and benefits of the plan and any important considerations.
Application
If you are happy to proceed we will help you complete the application form and submit it to the plan provider.
Valuation
Before equity release can proceed your property must be inspected, a surveyor is appointed to value the property and check it qualifies against the lenders offer terms. The provider will then issue a formal offer including full terms and conditions.
Legal advice
Independent solicitors acting on your behalf will cover any legal aspects. The role of the solicitor is to ensure you understand the long-term nature of an equity release contract so you can proceed with full knowledge of the risks and rewards.
Completion
Typically, equity release can take between 4 – 8 weeks from application to completion stage. Once completed you can enjoy the money you have released!
Lifetime Mortgage Frequently Asked Questions
1.) Can I move home in the future if I have a lifetime mortgage?
A. Yes you can. If this is something you’re planning to do, or want to have the option to do, let’s have a chat. You may be able to “port” your lifetime mortgage to a new property, if the new house meets your lender’s criteria. If you’re downsizing, you may have to repay a portion of your existing lifetime mortgage and there may be an early repayment charge to do so. Some products offer features that let you clear your mortgage without penalty.
2.) How long will it take to receive the money released using a lifetime mortgage?
On average, from application to receiving your money, the process takes between 4- 8 weeks. However Harbour Equity Release will always try to be as efficient as possible however there can be unforeseen issues along the way which can delay the process.
3.) If I have a lifetime mortgage, when I die, will I leave my family in debt?
All our lifetime mortgages fully meet the Equity Release Council’s product standards and therefore feature a no negative equity guarantee. This means that your estate will never own more than the property is worth when it’s sold, provided it is sold for a fair market price.”
4.) Will I still own my own home if I have a lifetime mortgage?
A. With a lifetime mortgage, you continue to own 100% of your home. The loan is secured against your home, much like a conventional mortgage which, along with any interest accrued, will be paid back when you either pass away or move into long term care.
5.) What happens if lifetime mortgage interest rates go down?
If lifetime mortgage interest rates go down, Harbour Equity Release can review your plan. Being able to change your plan will depend upon whether you qualify for the latest plan developments, the amount outstanding on your equity release plan including interest that has accrued and any potential early repayment charges that may be applicable.
6.) How much does your advice cost?
Harbour Equity Release provides initial advice for free and without obligation. Only if your case completes and the funds released, would our advice fee of £1,695 be payable. Other lender and solicitor’s fees may apply.
To read more about lifetime mortgages and the Equity Release Council Standards Click Here
Equity release may involve a home reversion plan or a lifetime mortgage, which is secured against your property and will reduce the value of your estate and impact funding long-term care. To understand the features and risks, ask for a personalised illustration. Equity release requires paying off any existing mortgage. Any money released, plus accrued interest, would be repaid upon death or moving into long-term care.
