Have you ever dreamed about that special retirement which will allow you to travel the world and enjoying new experiences? Or maybe you want to pay for your daughter’s wedding or help your son with a deposit for his first flat or buy your grandson/daughter their first car.
Maybe you are finding that your pension income is not keeping up with the increasing cost of living and you would like an additional stream of income to help provide you with life’s little luxuries; the list is endless. Is all your wealth tied up in your home in the form of equity? If so, you are the classic example of being asset rich and cash poor! The value of your home minus any mortgage or secured loan you have is your defined as your ‘equity’.
You may be worth tens of thousands of pounds but find yourself in the frustrating situation where you cannot access these “hidden savings”. A Lifetime mortgage could be the perfect solution to “free up” this money and help you achieve your lifetime ambitions.
What Exactly Is A Lifetime Mortgage?
There are two main types of Lifetime Mortgages. A ‘Lump Sum’ Lifetime Mortgage, where a loan is secured against your property to provide you with a tax-free’ cash lump sum to spend as you choose and a ‘Drawdown’ Lifetime Mortgage which works in the same way as the lump sum option, but you can choose to take the money in stages instead.
Lifetime mortgages are types of ‘equity release plans’ which were first introduced in the mid-sixties. Over time and with strict regulation these products have improved to be the customer friendly, flexible products we have today. They are plans which allow property owners over the age of 55 to release some of the equity that is currently tied up in their home. It is similar to a conventional mortgage but without a pre-determined and fixed repayment date.
Typically, the only time the loan becomes repayable is when the property is sold usually upon you and your partner’s death or when the surviving partner moves into a long-term residential care home. In the majority of cases, the initial mortgage is set up with a ‘fixed for life’ interest rate, which doesn’t change for the lifetime of the loan. There are many benefits and guarantees which you, the homeowner, can enjoy.