FAQ: Lifetime Mortgages

Can I lose my home under an equity release lifetime mortgage?

Mon, 22 Mar 2010 10:48:31 GMT

I am thinking of taking out an equity release lifetime mortgage but I am worried that I might lose my home and not be able to live there for the rest of my life? What reassurance can you give that I will not lose my home if I take out an equity release lifetime mortgage?

No you won't lose your home under a Safe Home Income Plan (SHIP) approved equity release lifetime mortgage because, unlike a home reversion plan, if you take out a lifetime mortgage you are not selling your homes ownership to release some money, simply agreeing to the lifetime mortgage provider placing a legal charge on your title deeds at the Land Registry to guarantee them that when your property is sold they will get their money back. Likewise your right to remain living in your property for the rest of your life is also guaranteed.

To further reassure you, the amount of money you borrow plus accumulated interest, can never exceed the value of the property under a SHIP approved roll up lifetime mortgage, due to the plans no negative equity guarantee. Even better, you will continue to benefit from any future increases in the value of the property.

To find out more about the safeguards you have under an equity release lifetime mortgage see key safeguards.

Professional advice

Before entering into any equity release plan we would strongly recommend that you fully discuss the benefits of equity release with an experienced, specialist adviser such as ourselves. being impartial we will be able to discuss all forms of equity release with you including interest only lifetime mortgages where the debt doesn't build up. If you would like to arrange a free no obligation home appointment, please complete our online enquiry form or call us on FREEPHONE 0800 970 4883 and we will discuss a suitable appointment with you.

Can the amount repaid under a roll up lifetime mortgage exceed the value of our home?

Thu, 06 May 2010 12:17:51 GMT

My husband is worried that the amount repaid under a roll up lifetime mortgage could exceed the value of our home. Is this correct?

No the debt can never exceed the value of your home under a lifetime mortgage providing it is lifetime mortgage approved by the Safe Home Income Plan organisation (SHIP). This is because such lifetime mortgages carry a no negative equity guarantee, which means that should the loan plus accumulated interest ever technically exceed the value of your home, the lifetime mortgage provider loses out, not you or your family. Under such circumstances, your estate would be left with nothing but most importantly they will never inherit an outstanding debt.

How much will be left for children or beneficiaries under roll up lifetime mortgages will depend solely on how long it is before the last one of you move out to go into care or die and what happens to house prices.

More information about other key safeguards can be found on key safeguard page of this website.

Can I repay a lifetime mortgage early?

Thu, 06 May 2010 12:40:02 GMT

If I took out a lifetime mortgage can I repay the plan early?

Yes, unlike a home reversion plan, you can repay a lifetime mortgage anytime before you die or need to go into care. However, depending on how early you repay it and the lifetime mortgage provider, you may have an Early Repayment Charge to pay in addition to the balance of loan taken and , in the case of a roll up lifetime mortgage, accumulated interest.

Whilst early repayment charges are one important factor to consider in choosing a lifetime mortgage, it is only one factor. We would recommend that anyone thinking of a taking out a lifetime mortgage should receive face to face advice from a specialist impartial equity release adviser such as ourselves, so that we can consider all lifetime mortgages and other equity release schemes and consider there relative benefits and drawbacks including comparing early repayment charges.

Free initial consultation

If you would like to benefit from a free home consultation with an impartial and experienced equity release adviser, please complete our online enquiry form and we will call you back to discuss your requirements and make an appointment as soon as possible.

What is the no-negative equity guarantee?

Sat, 08 May 2010 12:52:46 GMT

I have been told that lifetime mortgages have a no negative equity guarantee, what is meant by this?

The no negative equity guarantee is a safeguard offered by all good, safe, roll up lifetime mortgages. What it guarantees is that the amount of interest accumulated under a roll up lifetime mortgage when added to the amount borrowed, will never exceed the future value of your property when it is finally sold in certain circumstances outlined in the scheme provider's details.

In the case of roll up lifetime mortgages which meet SHIP safeguards, this no negative equity guarantee normally applies just when the property is eventually sold because the last applicant dies or needs permanent long term care in a care home. Some providers are however, a little more generous and will apply it should the applicant sell to move into a child's home, providing your child is to be the your main official carer.

No-negative equity guarantee benefits.

Whilst a roll up lifetime mortgage gives you the reassurance of having a fixed interest rate for life and this means that you will know at outset what the debt will be at any age, you can not control what will happen to house prices in the future and therefore what will be left for beneficiaries. At least the no-negative equity release guarantee gives you the reassurance that the debt will not exceed what you can sell your home for in the future. Therefore, whilst technically you could use up all the equity in your property under a roll up lifetime mortgage, you will not leave an ongoing debt for children after you sell your property.

In the event that your home had fallen by the time you sell it and the debt had become larger than the homes value, the guarantee applies and the lender would accept whatever the property could be sold for as full settlement.

To find out more about this and other safeguards you have, visit key safeguards.

What is a drawdown scheme?

Sun, 05 Jun 2011 08:51:54 GMT

I have heard about drawdown equity release schemes, what are they?

Drawdown equity release schemes are a type of roll up lifetime mortgage, where instead of you receiving at the outset the maximum amount available (based on your age and property value), only to possibly put any excess money (over what you need for your immediate needs) into the bank, the plan provider grants you a total facility but you only take initially what you require (normally at least a minimum of £10,000), but can then request further draws on the facility until you have used it all up.

Providing you do not need the very maximum amount of money immediately, not only does this give the reassurance that more money is available when you need it, but more importantly you stop wasting, unecessarily the equity in your home, because interest is only charged and accumulated by the lender based on what you have actually withdrawn, not on the amount of your facility. Only when you borrow more, will further interest be compounded.

Whilst specific details of how frequently you can withdraw money and the process involved will vary slightly between providers, generally you can withdraw further money from as little as £2,000 at a time and usually with no additional establishment fees. There is nomally no minimum time interval between taking your original loan and applying to withdraw more money and if required you can normally withdraw as frequently as once a month although you shouldn't think of this as an income plan as you can only continue to withdraw money whilst you have any unused facility to draw.

The interest rate applied on any new borrowing will not normally be the same as on the original draw and can be higher or lower, determined by interest rates prevailing at the time you reqquest it, but will once again be offered at a fixed rate for life. It will not however affect the interest rate already applied to your existing loan. You will therefore end up with a series of different interest rates.

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

Find Out More

If this is just what you could do with, why not find out how large a facility you establish immediately by using our free equity release calculator or call us on 0800 970 4883 or complete our enquiry form to arrange a free no obligation home consultation to discuss it more.