A lifetime mortgage is the most popular type of equity release plan. It is a loan secured against your property which provides you with a tax-free cash lump sum to spend however you like, with typically no monthly repayments.
Compound interest is added to the lifetime mortgage loan throughout your lifetime. The loan plus interest is paid back when your home is sold, usually when you and your partner move into long-term care, or when you and your partner die.
Drawdown lifetime mortgages work in the same way as a lifetime mortgage but with more flexibility. After an initial amount, these plans enable you to take the money in stages, as and when you need it, rather than taking out one lump sum. The advantage of this option is that interest is only accrued on the money you have taken which can significantly reduce the overall cost.
Enhanced lifetime mortgage plans enable you to release more money from your home than a standard lifetime mortgage. If you or your partner have any health or lifestyle conditions you may be able to release more money from your home. Health issues such as diabetes, heart problems or high blood pressure are typical examples that could qualify you for an enhanced equity release plan. The same applies to lifestyle factors such as heavy smoking. You may miss out on thousands if you choose an adviser who can’t advise on this.
If you want to guarantee an inheritance for your family, this is now possible with some lifetime mortgages. A couple who are able to release £50,000 and want to ensure their grandchildren are left with an inheritance could take £30,000 (60 per cent of the maximum available) leaving 40 per cent of the property ‘protected’.
Interest Payment Plans
To meet the increasing needs of people wanting to release cash from their homes, it is possible to get interest payment lifetime mortgages. They work in the same way as a lifetime mortgage, however you can make regular payments on the interest that rolls up over the lifetime of the loan, subject to minimum amounts.
Home Reversion Plans
With a home reversion plan you sell all or part of your home to a reversion company in exchange for a tax-free cash lump sum and a guaranteed lifetime lease with no monthly repayments to make. You can stay in your home rent-free for as long as you like. Both you and the reversion company share any increase in your property's value, providing you have not exchanged 100 per cent of its value.
If you would like more information on equity release and how it could help you, then simply request a guide or call freephone 0808 208 5406 to arrange your free no-obligation consultation.
Call freephone 0808 208 5406
Lines are open Mon-Thurs 9am–9pm, Fri 9am–5.30pm & Sat 9am–1pm.
Unless you decide to go ahead, Key's service is completely free of charge, as Key's typical advice fee of 1.95% of the amount released would only be payable on completion of a plan.
If you are considering equity release we recommend that you read through is equity release right for you?