There are many different equity release plans that could help you tap into your property wealth without having to move. But which one is right for you?
Lifetime mortgages are a type of equity release that have a range of different features to meet different needs and priorities.
Lifetime mortgage facts:
Available to homeowners aged 55 and over with a property worth at least £70,000.
Typically there are no monthly repayments to make as the loan plus compound interest is repaid when the plan comes to an end.
All of the plans we recommend meet the Equity Release Council standards meaning you get the no negative equity guarantee and will never owe more than your home is worth.
Lifetime mortgage plans and features:
Lump sum and drawdown plans
If you’re looking for a one-off amount of money, a lump sum lifetime mortgage could be the right option. The interest rates on these mortgages are fixed for life. As compound interest will be rolled up on the money you’ve released, you will owe more if you take all your available cash in one go.
If you wish to have some money now and access more at a later date, a drawdown plan may be more suitable for you. With this sort of plan, you can take out an initial lump sum and then have access to further funds in the future should you need it.
With a drawdown plan, interest gets charged on the amount of money withdrawn and therefore can be more cost effective for you over the long term. Interest rates on any future cash withdrawals are set at the prevailing rate at the time the drawdown is taken.Your lender may have the option to withdraw your additional borrowing facility.
If leaving an inheritance to your loved ones is something you’d like to do, some plans will allow you to ring-fence a percentage of the future value of your home for your beneficiaries (subject to criteria). No matter what happens to house values, your beneficiaries will receive that percentage in the future, subject to further funds not being withdrawn.
Although you can move your equity release plan to another property, it must fit the lender’s criteria. The benefit of having downsizing protection means that after a qualifying period, if you want to move to a home that isn’t suitable to the lender, you can repay the amount you owe in full without paying an early repayment charge, our expert adviser will explain this feature in more depth to you.
Partial capital repayments
If you can and wish to make repayments to reduce the overall cost of your lifetime mortgage, you have this option with some plans.
With this feature, you can make voluntary ad hoc repayments up to 10% - 12% of the amount you initially borrowed to reduce the size of your loan from which the interest is calculated, without incurring early repayment charges. Should you repay more than the 10 - 12%, early repayment charges may apply.
Fixed early repayment charges
A lifetime mortgage is a long-term financial product and is not designed to be repaid early, otherwise early repayment charges may apply. However, you can choose a plan with fixed early repayment charges, if your long term plans do suddenly change you’ll always know how much you’ll be charged should you choose to pay off the loan early.
At Mortgage Advice Bureau Later Life, we’re committed to finding a solution that meets your needs and works for you.
We’ve carefully selected a group of leading providers to offer a range of products to meet your needs. All the plans we recommend meet the Equity Release Council's standards.
Remember, it is a regulatory requirement that you receive advice before you take out any equity release product. Your adviser will work with you to understand what’s most important to you and make a recommendation on that basis. Your adviser will also tell you if equity release isn't the correct option for you.
And once you decide to proceed with the plan recommended to you, we’ll support you the rest of the way.
Ready to find a plan?
Our specialist equity release advisers are here to help you decide if equity release could help improve your retirement ﬁnances.
Are you eligible?
Use our free equity release calculator to find out if you’re eligible and see how much you could release.