Equity Release

Equity Release

WHAT IS A LIFETIME MORTGAGE?
In most cases Equity Release will involve a Lifetime Mortgage. This gives our customers the freedom to release cash value from the equity within their home without having to move. The minimum age for a Lifetime Mortgage is 55. In recent years Equity Release has become ever increasingly popular. The increase in the number of new providers reflects the dramatic increase in enquiries and applications. Household names such as L&G, Aviva and LV have been joined by specialist Lifetime Mortgage providers such as More2Life, Pure Retirement, the list is long, and we have access to all providers through our network. As independent Equity Release advisers we offer products from the whole of the market

HOW DOES A LIFETIME MORTGAGE WORK?

You can use the money for any legal purpose, some of the most popular reasons people release equity from their home include

Clear existing debt

Clear an existing mortgage

Take that holiday

Help your family – Providing deposits for children and grandchildren to help them get on the property ladder is one of the main reasons people consider Equity Release

Home Improvements

Purchase a new house or a holiday home.

HOW DOES A DRAWDOWN FACILITY WORK??

The amount of money available depends on your age (of the youngest applicant when applying jointly) and the value of your property. The way it works, the lender agrees an overall amount at outset. You may require a lump sum or the ability to take cash when you need it or both. A drawdown facility is a ‘reserve’ which can be taken at any time as the need arises, generally in minimum tranches of £2000 at any time. For example: The maximum available loan may be £100000, you can take an initial lump sum of £40000 to address immediate needs, leaving £60000 on reserve to be taken at any time. You only pay interest on the total amount released which can save a considerable amount over the term of the mortgage. You should be aware that the rate offered will reflect the prevalent interest rates at the time the draw down is taken, this could be at a higher or lower rate of interest, often the rate is set line with the 15 year government gilts index

CAN I TAKE OUT A CONVENTIONAL MORTGAGE?

We offer a range of retirement mortgages for our older customers; most are on an interest only basis and can extend into your retirement years. As repayments are obligatory the lender will apply underwriting checks to ensure you can afford the repayments when you reach the end of your working life. Your retirement income would dictate the availability of these loans. Retirement interest only mortgages do not generally offer the flexible option of a Lifetime mortgage.

HOW IS A LIFETIME MORTGAGE REPAID AND IN WHAT CIRCUMSTANCES
There are no restrictions on moving to another property and the mortgage will generally be repaid from the sale proceeds of your existing house. If you are moving it may be possible to transfer all or part of the mortgage to the new property. The mortgage would also be repaid when certain events occur for example moving into long-term care or within 12 months of the death of the last borrower. With a joint mortgage this would only apply to the surviving partner, at this point the mortgage will be repaid, usually through the sale of the property. After the mortgage has been repaid any surplus funds from the sale would pass into your estate

CAN I MAKE REGULAR MONTHLY PAYMENTS AND/OR OVERPAYMENTS?
Many schemes allow regular monthly payments These options include

Monthly interest payment for the full amount. This will ensure your outstanding mortgage will not increase, that none of the equity within your home will be eroded by accruing interest.

Monthly interest payments for a lower amount (selected by you) to reduce the accrual of interest. This means the equity within your home would reduce at a slower rate.

In both cases payments can be reduced or stopped at any time

Ad Hoc payments. Most schemes allow lump sum payments of up to 10% of the outstanding debt at any time within a 12-month period. Anything above this amount may incur early redemption penalties.

Interest Roll Up. Most Lifetime Mortgages are arranged on a roll up of interest basis. At the end of the mortgage the loan is generally repaid from sale proceeds. Whilst the debt will increase over the years traditionally house prices have increased year on year, if this continues this will have a positive effect on the equity remaining at the end of the loan.

Regardless of house prices rising or falling all of our providers offer a NO NEGATIVE EQUITY GUARANTEE ensuring you will never leave your family with a deficit or debt.

WHAT IS A LIFETIME INCOME MORTGAGE?

If you don’t require a lump sum but are looking to increase retirement income one option is the Lifetime Income Mortgage. This will give you a regular monthly amount established at outset for a chosen term. Obviously, your circumstances will dictate the amounts involved but if it’s an increase in your day to day living income that you require this is a good option.

HOW MUCH CAN I BORROW?

This can vary between lenders; some providers are happy to lend from age 55 others from age 60 With a joint application the YOUNGEST applicants age is used to calculate the available loan. The older the applicant the higher the available lump sum. An impaired life history can impact the application i.e. if you have any adverse medical history enhanced rates can apply.

Below is a typical example of how much may be available. This guide is for illustration only as sometimes much higher lending levels can be achieved

Age of youngest applicant             Percentage of property value available
55                                                                      20%
60                                                                      25%
65                                                                      30%
70                                                                      36%
75                                                                      41%
80                                                                      47%

E.g. a 70-year-old (based on the youngest applicant) with a property worth £300,000 would be able to borrow £108,000 (£300,000 x 36%)

CAN I REPAY THE MORTGAGE?
You can repay your Lifetime Mortgage at any time; however, you should be aware that in some cases redemption (early repayment) penalties may be incurred. These can be fixed at outset or dependent on the gilt rates at the time. Yet another reason why expert advice should be sought at outset to ensure the most appropriate provider is chosen to suit your own circumstances, goals and attitude to risk.
NO PENALTIES APPLY IN THE EVENT OF DEATH OR THE APPLICANTS GOING INTO LONG TERM CARE.

CAN I MOVE TO A NEW HOUSE? Your loan may be ‘ported’ (transferred) to the new property on the proviso that the property and loan size comply with the providers lending criteria at the time.

 CAN I USE EQUITY RELEASE TO BUY A PROPERTY??
Absolutely, Equity Release can be used to help buy the home of your dreams without having to provide all of the funds from your own resources. For example, if you are downsizing by using a Lifetime Mortgage to help buy your new house could enable you to retain money from your sale proceeds. The procedure is the same as a normal purchase.

Equity release does not suit everybody but can be highly advantageous in the right circumstances, allowing you to release cash either in a single lump sum or on a drawdown basis. However, it is essential to seek advice on whether it is suitable for you. We will help you understand if it is the right option, so please get in touch if you are considering an Equity Release scheme. We are experts in this market and will make sure you receive the right advice.

AN EQUITY RELEASE PRODUCT WILL REDUCE THE VALUE OF YOUR ESTATE, WILL NOT BE SUITABLE FOR EVERYONE AND MAY AFFECT YOUR ENTITLEMENT TO STATE BENEFITS. TO UNDERSTAND THE FEATURES AND RISKS PLEASE ASK FOR A PERSONALISED ILLUSTRATION

Age of youngest applicant
55
60
65
70
75
80

Percentage of property value available
20%
25%
30%
36%
41%
47%

E.g. a 70-year-old (based on the youngest applicant) with a property worth £300,000 would be able to borrow £108,000 (£300,000 x 36%)

 

Equity release does not suit everybody but can be highly advantageous in the right circumstances, allowing you to release cash either in a single lump sum or on a drawdown basis. However, it is essential to seek advice on whether it is suitable for you. We will help you understand if it is the right option, so please get in touch if you are considering an Equity Release scheme. We are experts in this market and will make sure you receive the right advice.

At Lifetime Mortgages we have been advising our clients since 1992. We value our hard-earned reputation for clear, fair and honest advice. We are specialised, licenced mortgage and protection advisers who have become ever more involved with Equity Release products. As people live longer and healthier lives the market has grown enormously. Regulation has ensured that anything less than a high stand of clear, fair and honest advice will not be tolerated. In addition to these goals we pride ourselves on our friendly and relaxed method of business.

  • We will visit you in your home or you can come to our offices in Saxon Square.
  • We will put you at ease and answer any questions you have in a friendly, relaxed manner.
  • We will involve your family if you so choose.
  • We will not charge any fees for your consultation
  • We will not charge you any fees for our recommendations

We charge fees only upon successful completion, your consultations are free and we only charge when a satisfactory conclusion is reached for our customers.

www.moneyadviceservice.org.uk/en/articles/equity-release

AN EQUITY RELEASE PRODUCT WILL REDUCE THE VALUE OF YOUR ESTATE, WILL NOT BE SUITABLE FOR EVERYONE AND MAY AFFECT YOUR ENTITLEMENT TO STATE BENEFITS. TO UNDERSTAND THE FEATURES AND RISKS PLEASE ASK FOR A PERSONALISED ILLUSTRATION

DISCLAIMER

EQUITY RELEASE: An Equity Release product will reduce the value of your estate, will not be suitable for everyone and may affect your entitlement to state benefits. To understand the features and risks please ask for a personalised illustration. Check that this mortgage will meet your needs if you want to move or sell your home or you want your family to inherit it. If you are in any doubt seek independent advice.
John Murphy is the Principle of Lifetime Mortgages. Mortgage Search trading as LIFETIME MORTGAGES is an Appointed Representative of PRIMIS Mortgage Network which is a trading name of Personal Touch Financial Services Limited. Personal Touch Financial Services Limited is authorised and regulated by the Financial Conduct Authority.

MORTGAGES & DEBT CONSOLIDATION:
• YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
• Debt consolidation is not always the most suitable option, consolidating debts must be carefully considered. It will usually mean more interest over a longer repayment term and there may also be early repayment penalties on your current mortgage, you should think carefully before securing other debts against your home. There are other ways to manage debt such as free debt advice charities, you can find out more by contacting the Money Advice Service, these services may be more suitable for you.
• The Financial Conduct Authority does not regulate most buy to let mortgages.
FEES: We typically charge a fee of £299 for our mortgage services, which is payable upon completion. For our Equity Release Advice we charge a fee of up to £750 payable upfront. Our typical fee is £299.