Think about equity release with partner

Lifetime Mortgages

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.

Benefits and Advantages Of A Lifetime Mortgage

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  • You continue to own your home as with a conventional mortgage and can stay in your home for the rest of your life.
  • The cash released from your home is tax-free.
  • You are under no obligation to make repayments, but because plans in today’s market are so flexible you can, if you wish, make repayments which can prevent interest from being added and indeed reduce what you owe over time. The home owners can remain in their property, enjoy the benefits of the extra money released from the home, and not have to worry about repaying the debt by monthly payments.
  • With some plans there is an option which guarantees an inheritance for your family.
  • As you still retain ownership of the property, you will benefit from any increase in property values.
  • You can spend the money however you choose.
  • There are no restrictions on how they can spend their money.
  • You can move house with Equity Release Council approved plans subject to the providers lending criteria.
  • You will never owe more than the value of your home with Equity Release Council approved plans. This is called the ‘No negative equity guarantee’.

At Equity Release Scotland, we feel it is equally important to highlight the negative aspects of a lifetime mortgage. We want all of our clients to have total clarity and understanding of the products that they might be interested in buying, so that they can make an educated and informed decision in what is a very important matter.

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Other Things To Be Taken Into Consideration With of A Lifetime Mortgage.

The perfectly designed product has never existed, think about any car you have ever purchased, or for that matter any other product. There will always be things that you don’t like, so let’s take a look at some of the things you need to bear in mind when choosing a lifetime mortgage.

  • The size of your loan will continue to increase, remember there are no monthly payments to make.
  • Drawing down further funds at a later point is always a possibility, but it may entail you having to go through the entire process again.
  • There will be implications on the size of the inheritance you can leave behind, although if this a concern you are able to ring fence and protect an agreed upon inheritance value.
  • Should circumstances change, and you decide to repay the loan earlier, there could be an early termination fee, as lifetime mortgages are viewed by the institutions as a long term agreement.
  • Taking out a lifetime mortgage could affect your tax situation, and also your eligibility for means tested benefits. It is virtually impossible to assess this aspect properly as nobody has any idea of how government policy will change in the future.

The idea behind this section of our website is to provide you with some answers to the many questions that our clients invariably have.

We do not and never have engaged in pressuring our clients into purchasing a product. In fact, on some occasions, we have actually advised our clients not to move forward with equity release, as in our opinion it was not the appropriate vehicle for their needs, even though this advice cost the company money.

It is this kind of refreshing honesty that we believe sets Equity Release Scotland apart. We will walk you through every available option, explaining the pros and cons of each product, and answering any questions that you might have.

We view ourselves as a partner working with you to come up with the best solution, with the added advantage of being independent. This gives you access to a broad range of products, some of which offer exclusive rates or bonuses, which are not available on the high street.

Stop struggling with your current lifestyle, and put your property to work for you. It is time you reaped the rewards of your hard work, and began to enjoy some of life’s luxuries. You have absolutely nothing to lose, and a lot to gain, so for more information or to book a no-obligation appointment call our friendly and helpful customer services team today on 0333 360 1958 (Free Call)

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What is a Lifetime Mortgage?

Once you have decided to release some of the equity in your property, the next decision to make is which financial product you want to use for this purpose. A lifetime mortgage is the most common solution, and it works in a similar way to the standard mortgage you paid when you were buying your property but in reverse.

House Sale

Upon either the death of the homeowners, or should they have to leave the premises to move into a care home, for instance, the property is then sold, and the proceeds from the sale are then used to repay the debt.

Arrange an Appointment

No website will ever be able to answer every individual question pertaining to your individual circumstances, which is why we always recommend that you arrange a meeting with our friendly team of advisors. All of our staff are fully trained and have an in-depth knowledge of the equity release market, and all of the various products currently on the market.

Valuation and Offer

The bank or other lending institution will have the property valued by an independent chartered surveyor, and then make an offer dependent on some factors. These include the value of the property, the percent of the equity you wish to sell, and the age of the people taking out the mortgage.

Receive Your Lump Sum Payment

Once the mortgage is agreed and accepted by both parties, the money is deposited in the homeowner’s account. There are no repayments made during the lifetime of the homeowner, and compound interest is added every year to the total sum owed.

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Tax

There may be some tax implications that you need to take into consideration, but these will vary on an individual basis.

Advice

If and when you decide to move forward with your application, our team of advisors will assist you and answer any further questions you might have.

Assistance

Take you time and don’t ever be rushed into making a decision, whatever your requirements Equity Release Scotland will be there to assist you every step of the way.

Frequently Ask Questions

Once the money has been released to you, the choice on what to spend it on is entirely up to you. There are no restrictions whatsoever (provided it is legal!). So whether you want to go on a round the world trip, buy a new car, or simply pay off other debts, the choice is entirely yours.

Absolutely, that is one of the major benefits of this type of scheme, and it in our opinion is one of the more important foundations upon with the agreement is built. There is little point in removing the financial stress, if a few years down the road you are concerned about losing your home. In fact, not only are you entitled to remain in the home for the rest of your life, but so is anyone else mentioned in the agreement.

If everything goes according to plan, then it is entirely feasible for the money to be released to you between three and four weeks. However, always err on the side of caution and plan on the entire process taking up to eight weeks. The length of time is not entirely under our control, and can take even longer if your solicitor is unfamiliar with equity release schemes for instance.

When you sign the contract, you are simply agreeing to another style of mortgage, so the ownership of the property remains with you.

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