Equity Release
A lifetime mortgage is a regulated mortgage contract usually aimed at the mature home owners who wish to increase either capital or income – or both – using their property as security for the mortgage arrangement.
A customer takes out a mortgage on a proportion of the property’s value and retains ownership of the property – usually on a fixed or capped rate. The interest rate chargeable on these arrangements is usually higher than on standard mortgages.
The customer generally makes no repayments on the loan and the interest is rolled up until repayment occurs e.g. the customer moves property, goes into long–term care or dies.
The value of the debt owed by the customer can grow rapidly, which means these arrangements are potentially high risk. For example a roll up loan taken out at age 60 with an APR of 7% could nearly double in 10 years and quadruple in 20.
A Lifetime mortgage may be:
- A home income plan
- An interest–only mortgage
- A fixed repayment mortgage
- A roll–up mortgage (rolled up means interest is added to the loan, for example each year)
To speak to an advisor regarding Equity Release/Lifetime Mortgages, please contact us.
