Equity Release on Lifetime mortgages

Accessing some of your home’s value and using it however suits you best.

EQUITY RELEASE refers to any product that allows you to unlock a tax-free lump sum from the value of your home. Whatever financial freedom means to you in later life, whether that’s renovating your home, making those vital home improvements, helping your children or simply supplementing your income, equity release is designed to help.

“Lifetime mortgages are the most popular type of equity release product and are available to homeowners.”

Lifetime mortgages are the most popular type of equity release product and are available to homeowners. It’s a way of accessing some of your home’s value and using it however suits you best. There are three main stipulations that you should meet in order to qualify for equity release. You must be aged 55 or over, your home should be worth at least £70,000 and you should be a home owner. If you have a mortgage or secured loan on your property you may still qualify for equity release.

BALANCE OF THE LOAN

With a lifetime mortgage, you take out a loan secured against your property. Often, these loans require no repayments during your lifetime and the interest is simply added to the balance of the loan. Once you have taken out a lifetime mortgage, the loan accrues interest. Some lenders allow you to pay of the interest each month but many people decide to let the interest build up.

ACCESS THE CASH

Some lifetime mortgages pay you a single lump sum, while others allow drawdown, which means you access the cash in lump sum amounts as and when you need it. The benefit of a drawdown loan is that interest is charged only on the money that you have already released from your equity. You are allowed to stay in your home and nothing is paid back to the lender until you move into a care home or die. At this point, your home is sold to pay of the debt and the interest. There are strict conditions that must be met if you are to qualify for a lifetime mortgage. You must be at least 55 and own your property outright, and it must be your main residence. You can usually borrow up to 60% of its value.

'NO NEGATIVE EQUITY GUARANTEE'

The Equity Release Council, which is the industry trade body, insists that all lifetime mortgages include a ‘no negative equity guarantee’. This means that if the value of your property falls and the money received when it is sold is not enough to repay the loan in full, neither you, your heirs nor your estate will need to make up the difference. Some lenders will allow you to pay of the interest to prevent it from accumulating. This is not the same as a retirement interest-only mortgage.

OTHER COSTS ASSOCIATED

When you take out a lifetime mortgage there may be other costs associated, including solicitors’ fees, survey fees and application fees. It is also worth noting that lifetime mortgages are designed to do just that – last a lifetime – and many carry an early repayment charge should you decide to repay the mortgage early.

>> UNLOCKING MONEY TIED UP IN YOUR HOME <<

If you’re looking to unlock money tied up in your home through an equity release scheme and it's suitable for you, for further information, contact - UK +44 (0) 203 883 1017 Hong Kong +852 6017 4140 – email info@cedar-crest.co.uk

Your home may be repossessed if you do not keep up repayments on your mortgage.