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LIFETIME MORTGAGE OR HOME REVERSION ?


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WARNING

Increasing your income or savings can affect your entitlement to benefits.

Check out other options such as local authority grants and your entitlement to benefits

Always take professional advice and consider carefully all your options before entering into any Equity Release contract


  

 

Life Time Mortgages

are only available to people over a certain age, normally 55+ These life time mortgages are exactly what they say, they last your lifetime. In the case of jointly owned life time mortgages they remain in place until both have died.

Just like a standard mortgage the loan is secured against your property. With life time mortgages you continue to own your home and you do not have to make monthly payments or pay back the mortgage during your lifetime. However, you may have to sell up and pay off the mortgage if you have to move into long term residential care or your inability to maintain the property to a reasonable standard. The release of equity will depend on your age and the value of the property as shown in the equity release calculator.

 

In the case of Regulated Life Time Mortgages you are guaranteed that the outstanding mortgage balance will never exceed the value of your property.There are various ways in which you can release equity from your property using life time mortgages:

Rolled-Up Life Time Mortgages: Interest is charged each year and added onto the outstanding mortgage balance year on year. You can either take the equity release in the form of a tax free lump sum or tax free regular income called Drawdown. However be aware that by increasing your savings or income you may adversley affect your entitlement to benefits or age allowances.

Interest-Only Life Time Mortgages. You release equity by way of a tax free lump sum, and pay only the interest each month on the mortgage. To qualify for an interest only life time mortgage it would be necessary to prove affordability throughout your retirement years. The interest rate charged may be variable or fixed and provided you make the required payments each month the outstanding balance will remain constant throughout. When your home is finally sold the interest-only life time mortgage is paid off.

 

Fixed Repayment Life Time Mortgages: In this case you release equity from your home by way of a mortgage, which is secured against the value of the property. No interest is charged against the mortgage, instead you agree to a much higher fixed sum to be repaid to the lender when your home is sold. This fixed repayment neither increase or decreases no matter how short or long you remain in your property. The fixed repayment sum is set at the commencement of releasing equity and is subject to your age and life expectancy.

Home Income Plans ~ Life Time Mortgages. The equity released in the form of a tax free lump sum is used to purchase a regular income for life by way of an open market annuity. The income could be fixed throughout or if inflationary, with a lower initial annual income in the early years. The annuity income is designed to pay the interest on the mortgage each month leaving you with a small income. This is usually only suitable for those who are much older, say 80 or more. The outstanding balance on the life time mortgage is paid of from the final sale of the property.


The information contained throughout this site is not to be taken as advice or recommendation in any way. It is intended to give you an overview of what is available within the Equity Release market. Always seek professional advice before entering into any Equity Release contract.

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