When you take out a lifetime mortgage, it’s likely that your interest rate is fixed for life. While that certainty can be a benefit for many, it’s actually a disadvantage if rates start to drop.
If your circumstances have changed, do you know whether you could access more money from your home now?
Or perhaps your house has increased in value meaning there is more equity within it.
If your needs or circumstances have changed, there may be a lifetime mortgage that suits you better.
Your options could include:
Repayment: You could now be in a position where you’d like to repay some or all of the interest and / or some of the capital so there could be more equity remaining. Equity release may leave you with little or no property equity remaining.
Lump sum vs drawdown: Lump sum lets you unlock some of the equity in your home as a single, one-off amount. As compound interest will be rolled up on what you release, you will owe more if you release all your funds in one go. There could also be an option to take out a drawdown lifetime mortgage, starting with a smaller initial amount and taking out further amounts in the future if you need it. Your lender may have the option to withdraw your drawdown facility and if you choose to make a drawdown, the funds will be subject to the prevailing, fixed interest rate at the time which may be higher or lower than your original interest rate.
Inheritance protection: You could ring-fence a percentage of your home’s future value as a guaranteed inheritance.
Downsizing protection: If there’s a possibility you may move home in the future, this feature will allow you to repay your lifetime mortgage in full without an early repayment charge, should the property you’re moving to not be acceptable to your lender. This is usually after 5 years from when the plan completes.
You will require advice to switch to a new lifetime mortgage as switching may mean that early repayment charges are payable on the current lifetime mortgage. Our qualifitied equity release advisers will be able to discuss this with you.