A lifetime mortgage or equity release is when you borrow money secured against your home, provided it is your main residence, while retaining ownership.
However, when you die or move into long term care, your home will be sold and the money will be used to repay the loan. You can choose to ring-fence some of the value of your property as an inheritance for your family.
Additionally, some providers might be able to offer larger sums to those with certain medical conditions or even ‘lifestyle factors’ such as a smoking habit. It is always best to seek independent financial advice before deciding to take out a lifetime mortgage or equity release to ensure you understand how it may impact your finances or your family’s inheritance.
How does a lifetime mortgage work?
When you take out a lifetime mortgage the home still belongs to you and you remain responsible for any property maintenance. You will be charged interest on the amount you have borrowed, which can be repaid or added on to the total loan amount.
Upon your death or if you move into long term care your home will be sold and the money from the sale will be used to repay the loan. Any money left over once the loan has been settled will go to your beneficiaries or will go to you if going into care.
If there is enough money in your estate to settle the loan, your home would not need to be sold. If after the sale of your home there is not enough money to repay the loan, your beneficiaries would have to pay any extra from your estate.
To help safeguard against this most lifetime mortgages offer a no-negative-equity guarantee (Equity Release Council standard). Whereby, the lender promises that neither you nor your beneficiaries will ever have to pay more than the value of your home, even if this is less than the repayable amount.
Looking for lifetime mortgage advice in Cheshire?
If you would like lifetime mortgage advice, please get in touch via our enquiry form and a member of our team will be in contact to discuss your requirements and the best options for your circumstances.
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