Key Advantages of a flexible lifetime mortgage
- Rates can be lower than interest-only plans and are fixed for life.
- You can make repayments as and when it suits you, capped to an agreed amount each year.
- The compound interest that accrues on your loan will be lower if you make voluntary repayments
The Risks
- Some lenders may limit the number of payments that can be made throughout the year or require a minimum amount for each payment.
- Any lifetime mortgage may reduce the amount of inheritance you leave for your loved ones.
Safeguarding your future
With all lifetime mortgage plans, you will always retain 100% ownership of your home. And the ‘negative equity guarantee’ means that even if the value of your property decreases, you will never owe more than you borrowed or pass debt on to your family.
How a flexible lifetime mortgage works
This is a flexible form of equity release that suits many retirees’ lifestyles, as money can be repaid ‘as and when’ circumstances allow. If your finances change and you have more money available, you can put some of this towards paying back your drawdown lifetime mortgage.
Repayments will go towards both the interest and the capital value of your loan. So, by making these voluntary payments, you could keep the future balance of your loan level or even reduce the balance. Lowering the amount of interest that accrues over time means that the final payment will be smaller, and there will more money available for your beneficiaries to inherit.
Most lenders cap voluntary repayments at 10%, but some allow repayments of up to 40%. For some people, it may be possible to repay nearly the entire loan amount in just a few years.
There are no administration fees for making repayments, and it is generally very easy to do. Most lenders accept payments in all the normal ways, such as bank transfers, cheques, and many will also allow you to set up a standing order. You will need to speak with your lender before making any payments, to make sure that you don’t pay more than what was agreed in the loan terms.
How we help
It is a regulatory requirement that you take advice from a qualified equity release advisor for a lifetime mortgage.
At AskERIC, we have helped thousands of people find the right equity release option. We understand the worries that our clients have when considering their future finances and will always be a source of impartial information that you can trust. If equity release is not the best option for you, we’ll be sure to let you know.
When you contact us for advice, you will be appointed a personal advisor. They will get to know your unique circumstances and needs in order to best help you. You are very welcome to involve your family or close friends at any stage.
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One of our advisors would be happy to have a friendly, no-obligation chat to answer any questions you might have.
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