Lifetime Mortgages - Roll Up Schemes

With a roll up lifetime mortgage, instead of paying interest each month, you choose not to avoid make any repayments for the rest of your life, but allow the interest to be rolled up and added to the loan so that the debt gets larger.

The amount you originally borrowed, plus the accumulated interest which has been rolled-up, is only repaid when your home is eventually sold, typically on death of the last applicant or when they need to go into care.  This means that should you die or go into care after just one year the amount you need to repay is much smaller than if you repay it after 25 years.

Whilst the debt grows with time, the longer the time before the debt is repaid, hopefully your home's value will have increased although this cannot be guaranteed and could also fall. However, for your reassurance such roll up lifetime mortgages which are either SHIP approved or at least meet their requirements, do carry a no negative equity guarantee which means that the debt repaid on death or going into care, can never be greater than how much the home is eventually sold for.

Roll up lifetime mortgage-advantages

• Roll up lifetime mortgages are available to home owners where the youngest applicant is aged 55 or above.  This is opposed to home reversion plans where the typical minimum age is 65.
• Money released from a lifetime mortgage is tax free and can be spent on anything you choose.
• No repayments to be made during your lifetime unlike under an interest only lifetime mortgage.
• You retain full ownership of your home, so you benefit from any rises in the property market.
• A regulated, SHIP approved lifetime mortgage, offers you guaranteed occupancy for life.
• Although the debt will increase over time, a ‘No negative equity’ guarantee offered by all SHIP approved lenders means you will never pass on any debt to children once the house has been sold.
• The amount eventually repaid will be a debt against your estate and will reduce any potential inheritance tax liability.

Roll up lifetime mortgages-disadvantages

• The amount you leave as inheritance will decrease.
• You cannot usually raise as much with a lifetime mortgage as you could with a home reversion plan. 
• You could be required to pay an early repayment charge if you wish to pay off the plan early.
• Eligibility of means tested benefits could be affected.
• You cannot usually raise as much with a lifetime mortgage as you could with a home reversion plan.
• You could be required to pay an early repayment charge in addition to the amount built up, if you wish to pay off the plan early.
• Eligibility of means tested benefits could be affected.
• If you take the maximum equity release whilst relatively young and spend all of the money released, you may not be able to borrow further money to provide for yourself later in life, unlike a partial home reversion plan.
• Lifetime mortgages involve borrowing against your property, and may work out more expensive in the long term than downsizing to a smaller property, and may affect your entitlement to State benefits and grants.

Drawdown lifetime mortgages

Drawdown lifetime mortgages are roll up schemes where instead of you releasing all of the maximum amount available at the outset, a maximum facility is created and made available to you to take a minimum amount initially and then only draw down further money when needed.  Interest is only charged on the amount actually taken and not on the full facility.  This helps avoids the debt building up so fast and also overcomes the mistake of taking the maximum available simply to deposit it at lower rates in a bank or building society until you need it. 

How much could you receive?

Try our lifetime mortgage calculator to receive an immediate estimate as to how much you could release under either a single lump sum or a drawdown scheme.

Further information

If you have any further questions about roll up lifetime mortgages or other equity release schemes, or would now like to arrange a free home consultation, call us today on 0800 970 4883 or complete our online enquiry form.

This is a lifetime mortgage. To understand the features and risks, ask for a personalised illustration

Now what would you like to know more about?

Clicking on any of the following links will allow you to find out more about key information on releasing equity from your home.

Drawdown Lifetime Mortgages | Fixed Repayment Lifetime Mortgages | Interest Only Lifetime Mortgages | Home reversion Plans| How to book an appointment