Lifetime Mortgages and Home Reversions Plans for over 55s 

A Lifetime Mortgage is where the provider lends you a percentage of your property’s value in the form of tax-free cash. As with a traditional mortgage you will be charged interest on the loan however, with a Lifetime Mortgage you have the option not to make any monthly repayments (although you can if you want to) and there is no set term or repayment date. If you do decide to make monthly repayments this will typically only cover the interest on the loan however, you will have the flexibility to set up the Lifetime Mortgage to repay all, some, or none of the interest over the life of the plan.

 As with all Lifetime Mortgages, the loan plus interest continues until the plan comes to an end, usually when you pass away or move into long-term care. At this point the property is sold to repay the original sum borrowed, plus any interest that has accrued.

There are a number of different types of Lifetime Mortgages which we will be able to discuss with you and some of the more popular schemes are outlined below.

Lump Sum Lifetime Mortgage Plans

This type of product simply allows you to release all of the equity in one lump sum. Once the equity has been released the interest will start to accrue on the full loan amount.

Drawdown Lifetime Mortgage Plans

A Drawdown plan is similar to the Lump Sum option however you can retain a cash reserve that can be drawn down at some point in the future. Interest is only charged on the total amount you withdraw, and therefore this plan can save you a significant amount compared to a Lump Sum plan.

Enhanced Plans

If you or your partner have any health or lifestyle conditions you may be able to release more money from your home. Over 100 conditions qualify you for a larger cash release from your home including high blood pressure, diabetes, cancer, angina, kidney disease, and dementia. Lifestyle conditions such as a history of smoking or a high/low Body Mass Index (BMI) can also qualify. No medical assessment is necessary, and one of our specialist advisers can find out if you qualify for this type of plan for you.

Protected Plans

If you want to guarantee an inheritance for your family this is now possible with some Lifetime Mortgages. You can choose a fixed amount or a percentage of your home to be left to your beneficiaries when your plan comes to an end. This amount will be guaranteed.

Interest Payment Plans

Interest payment plans allow you to choose how much interest you want to pay and how long you want to pay the interest charged each month (for example, 1 year, 5 years or even up to the lifetime of the loan). The advantage of this option is by paying some (or all) of the interest payments during the plan term, the amount your provider takes at the end will be less, as you have already paid off some (or all) of the interest accrued. Also, if for any reason you are unable to make repayments, this plan can be converted so interest is added as with a standard Lifetime Mortgage. With options such as this it is essential that you seek specialist independent advice and speak to one our advisers to find the best plan for your needs.

Home Reversion Plans

While most customers find that a Lifetime Mortgage suits their needs best, there is another type of Equity Release plan available. A Home Reversion plan allows you to sell part or all of your home to a reversion plan company in exchange for a tax-free cash lump sum.

You can have the right to stay in your home effectively rent-free for as long as you choose which is why you don’t typically receive the full market value for the share of the home you sell.

If you sold half of your property to the reversion company, when the plan comes to an end (usually when you pass away or move into long-term care) then the money raised from the resulting sale of your home would be split equally between the reversion company and your estate.

Some customers choose a Home Reversion plan because the amount of equity you are initially able to release is typically greater than compared to a Lifetime mortgage.

However, in exchange for this greater sum of equity you will have to be comfortable with the fact that:

• You will no longer own your own home – however you can retain a percentage share
  
•  If your house value goes up, then you only benefit from the increase to the percentage you still own (if any)
  
•  You will receive less than the market value of your home (whatever percentage you sell)
  
• As you are selling part of your home it can be very difficult to end the plan and buy back the percentage you sold, so it’s less flexible than a Lifetime Mortgage
  

For expert advice and more information or to book your FREE consultation please visit one of our websites, call or email.

Bristol Mortgages Online     www.bristolmortgagesonline.com        Tel 0117 325 1511

Bath Mortgages Online         www.bathmortgagesonline.com            Tel 01225 584 888

Exeter Mortgages Online     www.exetermortgagesonline.com         Tel 01392 690 888