A lifetime mortgage frees up some of the wealth tied up in your home, allowing you to continue living there, as it doesn’t need repaying until you go into long-term care or die.
Interest is charged on what you have borrowed and your home is then sold and the money used to pay off the loan.
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If you’re a UK homeowner aged 55 or above and your home meets the standard construction regulations for England, Wales, Scotland or Northern Ireland, you should be able to secure a lifetime mortgage.
The amount you can borrow for a lifetime mortgage depends on your age and the overall value of your property. Typically, a lifetime mortgage comes with a fixed rate of interest, however, variable rates are available from some providers.
A lifetime mortgage is like a long-term loan which is secured against your property. It is a popular way of releasing equity, without making any repayments before the end of your plan. Instead, the loan and accumulated interest is paid in full from the sale of your property, when you move in to long-term care or die. Of course, a Lifetime Mortgage can have the effect of reducing the value of your estate by the original amount loaned.
There are three main types of lifetime mortgages to choose from. Each lifetime mortgage is unique and dependent on individual circumstance.
Lump Sum Lifetime Mortgages and Drawdown Lifetime Mortgages each enable you to access your money with more flexibility, releasing your cash over time, as and when you need it. Interest Only Lifetime Mortgages see you make repayments in full or on a regular basis to reduce the effect on the value of your estate.
These mortgages do not suit everybody and individual circumstances play a huge part on whether they are the best option for you.
The amount of equity available to you when you take out the plan will depend on a number of factors, including the value of your property, your age, health and lifestyle choices. Speak to our expert team at MortgageKey today to discuss your personal circumstances.
On average, at 65 years old, you may be able to borrow 25%-30%, whereas if you’re older, you can borrow as much as 50%. It’s also worth noting that some lenders have minimum loan amounts. This means your home may have to meet a minimum value specification, before you can apply.
Interest rates vary according to individual circumstances. Naturally, because you don’t make repayments during the term of your loan, a higher interest rate is applied, compared to a standard mortgage. The interest amount depends on how much you borrow, your property and the outcome of a financial assessment.
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