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Mortgage Advisor & Director
What is a lifetime mortgage?
A lifetime mortgage is when you take out a loan secured on your home, which does not need to be paid off until you die or transition into long-term care.
How does a lifetime mortgage work?
With a lifetime mortgage, you borrow money secured against your home while retaining ownership.
You can also elect to ring-fence a specific value to pass on as an inheritance to your family. Interest is only charged on the amount which has been borrowed. The interest value can either be repaid or added to the total loan amount.
When you die or move into long term care, the house is sold, and the proceeds of the sale are used to repay the loan. Once the loan is paid, your beneficiaries will receive any additional profits from the sale. If the loan can be repaid without needing to sell the property, your family can retain ownership.
In the event that selling the house does not generate enough profit to repay the loan, there is the change that your family would need to make up the difference. This is why most lifetime mortgages include a no-negative-equity guarantee, which ensures your family will not have to pay back more than the value of the home.
As the owner of the property, you continue to be responsible for maintenance.
What types of lifetime mortgage are there?
There are two types of lifetime mortgage to choose from:
Interest roll-up mortgage
An interest roll-up mortgage is where you get a lump sum or a regular amount, and then the interest charged is added to the total loan value. The total amount borrowed is then repaid at the end of the mortgage term when the house is sold.
Interest-paying mortgage
With an interest-paying lifetime mortgage, you get a lump sum and make monthly or ad-hoc payments to reduce the amount of interest building up. There are some mortgages that allow you to pay off some capital if you choose to. When the house is sold the final loan amount is taken from the proceeds.
Are lifetime mortgages regulated?
Yes, lifetime mortgages have been regulated in the UK by the Financial Conduct Authority since October 2004.
How much can I borrow on a lifetime mortgage?
There are many factors that will have an effect on the amount you can borrow on a lifetime mortgage.
Typically you can release between £10,000 to £100,000 with a lifetime mortgage. Get in touch with one of our team to discuss your options.
Are lifetime mortgages a good idea?
Lifetime mortgages allow you to release some of the equity in your home while continuing to live there.
You can recieve either a lump sum payment or regular income, and you only pay interest on what you've recieved. If you are not interested in downsizing, equity release can be a good option that allows you to free up cash while staying in your home. As a specialist mortgage product, we would recommend taking expert mortgage advice from an experienced broker Complete our online form to get started today.
Who is the best lifetime mortgage provider?
At Teito, we are a whole-of-market mortgage advisor, which means we have access to thousands of deals including the best equity release options. If you are interested in learning more about lifetime mortgages, complete our simple online form today to get started.
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Selecting a qualified and experienced mortgage adviser is of great importance. To choose a suitable adviser, evaluate their qualifications, experience, and reputation, and ensure they are regulated by the Financial Conduct Authority (FCA).
Read reviews from previous clients and make sure they provide a clear explanation of the products and services they offer, as well as the fees and charges associated with them.
Last updated 4 March 2024