Lifetime Mortgages

This type of equity release plan allows you to receive a tax-free cash lump sum in the form of a loan secured against your property. It is the most popular type of equity release and allows you to remain the owner of your own home.

You are able to stay in the property until you and your partner have either moved into long term care or passed away.

If you opt to take the money as one lump sum, rather than a drawdown (see below), then you accrue interest on the full amount you borrow from the beginning of your plan, typically on a fixed interest rate.

The main benefits of a lifetime mortgage:

  • You do not have to sell or move home, and you retain full ownership
  • The lump sum you release from your property is given to you tax-free
  • Typically no monthly repayments to make
  • Options to protect inheritance
  • The cash you release can be used for any purpose

 

 

Types of Lifetime Mortgage

 

Lifetime mortgages are available in a variety of forms; this is a flexible option that can help ensure you find the right equity release scheme for you.

Drawdown Lifetime Mortgage

This type of lifetime mortgage allows you to release smaller tax-free cash lump sums after the initial release, accessing the money as and when you need it.

One great benefit of a drawdown lifetime mortgage is the fact that you only accrue interest on the amount that you have released, not the full fund that you have available.

The increased flexibility also gives you the peace of mind that you have a plan that can change along with you.

 

Enhanced Plans

An enhanced plan may be available if you or your partner have certain health conditions or lifestyle choices. This type of lifetime mortgage allows you to release more money from your home than with a conventional lifetime mortgage.

A number of different health issues are considered, including high blood pressure, diabetes and heart problems. Additional lifestyle choices that affect eligibility for an enhanced plan include smoking.

 

Interest Payment Plans

If you have the means to pay the interest you may wish to make regular monthly payments in order to retain as much as your property value as possible. This can be a popular option if you’re looking to preserve more of your estate for future inheritance.

 

Additional Options

 

Protected Plans

This is an option that lets you ring fence a portion of your property’s future value to be passed on as an inheritance. This option is available from a number of providers and, if it’s something that you’re interested in, your adviser will guide you through the details and plans available.

 

Things to consider

Equity release will reduce the value of your estate and may affect your entitlement to means-tested benefits. If you’re considering equity release we recommend that you read is it right for you? carefully.

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