Lifetime mortgages can be a financial lifeline for older people who find themselves in need of cash, often living on small incomes despite living in properties worth hundreds of thousands of pounds.
Moving house can be an expensive and stressful process at any age. Many older people would prefer to stay put to and benefit from the ‘equity’ or value tied up in their homes, and lifetime mortgage schemes allow them to do that.
There are various types of plan available to home owners aged 55 and over. With Lifetime Mortgages where the interest is rolled up, a loan is taken out on the property to provide a lump sum, an income or a combination of the two. No interest is payable until the home is sold, this could be when you and your partner have both died or gone into long-term care.
With a Lifetime Mortgage with a drawdown facility, you can take your cash in stages. This can be useful as it gives flexibility and the reassurance that you can access further funds at some point in the future should you need them. Interest is also only charged on funds when they are drawn down.
More and more people are using lifetime mortgage to help enjoy a comfortable retirement, pay down debts, boost their income or plan capital expenditure.
Professional advice is essential; lifetime mortgage isn’t the right solution for everyone as these schemes are expensive and inflexible. Releasing cash from your home reduces the value of your estate and the amount of inheritance you leave, so you should involve your children and dependants from the outset.
Think carefully before securing other debts against your home. Equity released from your home will be secured against it.