Frequently Asked Questions
Q. What is a lifetime mortgage?
A. A lifetime mortgage is a product that allows you to release some of the equity from your home. (Equity is the difference between the value of your home and any outstanding mortgage balance you may have on it).
You can choose to take the available funds as either a lump sum or by “drawing down” monies as required.
You could also choose to sell your home to a provider in return for the maximum lump sum (Home Reversion Schemes) or retain ownership of the property and raise funds via a lifetime mortgage.
Q. Do I qualify for a lifetime mortgage?
A. You would need to be a homeowner aged 55 or over. (If you were younger than this, you may still qualify for an interest only or capital repayment mortgage.) There is no maximum age for a lifetime mortgage.
The current minimum property value is £60,000 and your home would also have to meet the lenders criteria.
Q. Will I need solicitors if I take out a lifetime mortgage?
A. Yes, you will need to use a solicitor to carry out the conveyancing and this person must be authorised by The Law Society to deal with lifetime mortgages. If you don't have a firm in mind, we can recommend a company that specialises in lifetime mortgage conveyancing.
Q. How safe are lifetime mortgages?
A. All of the lifetime mortgages we recommend are via providers who are members of The Equity Release Council (incorporating SHIP standards) and come with a “no negative equity” guarantee. This means that you can never owe more than the value of your home and no debt will ever be left to your estate.
Q. Why should I take specialist comprehensive mortgage advice?
A. Taking out any type of mortgage is a major decision. We feel that you need a specialist to guide you through the process and advise on the most suitable scheme for your personal requirements. We recommend that you discuss your intentions with your family.
Q. What happens if either myself or my partner need long term care?
A. If the care is provided in your own home, then the lifetime mortgage will continue unaffected. If both of you have to move into a residential or nursing home, the scheme would end and the property would need to be sold.
Q. What happens if I want to move home in the future?
A. Providing the new property you purchase meets the lenders criteria you would normally be able to transfer all or part of the lifetime mortgage onto your new home.
Q. Can I repay the loan in the future?
A. Some lifetime mortgage providers offer clearly defined early redemption penalties where you would incur no penalties on redeeming a scheme after the first five years. Others have more complex redemption penalties and you should take advice from a specialist to ensure you take out the most suitable scheme for your personal situation.
Q. What happens if one of us dies?
A. The scheme would continue and would only end when the surviving partner either dies or moves into long term care.
Q. How much equity can I release?
A. With some schemes the maximum tax free cash sum available is based on a combination of the value of your property and your age(s), whilst other schemes are based on long term sustainable income such as pensions, investment income and property rental income. The maximum available would not normally exceed 55% of the property value.
Q. Can I take out either a lifetime mortgage or retirement mortgage if I still have a mortgage?
A. It is not possible to have two mortgages on a property at the same time. Part of the proceeds of any new mortgage taken out would have to be used to pay off any existing mortgage you may have.
Q. If I take out a lifetime mortgage do I have to make any monthly payments?
A. Not unless you choose to do so. There are a choice of schemes available whereby no payments have to be made, with all interest being added to the loan and the amount outstanding increasing year on year. There are also schemes available where you can choose to pay any interest monthly, so that the loan does not increase or make optional annual penalty free payments of up to 10% of the amount borrowed.
Q. Will I still own my own home?
A. Yes. With any lifetime mortgage you will not only still own the property but also benefit from any future increases in property values. You will also still be responsible for the cost of repairs and upkeep of the property.
Q. Will I still be able to leave an inheritance to my family?
A. Yes. You can choose to either protect a percentage of the property value to provide an inheritance for your loved ones or choose a scheme where you pay any interest monthly so that the amount borrowed would never increase.
Q. Is a retirement mortgage or lifetime mortgage right for me?
A. We will assess your individual requirements and tell you if we do not feel either of these options are suitable for you. You should also consider other alternative methods of raising funds such as downsizing, utilising savings or the availability of grants.
Q. If I don't need to borrow the money on a lifetime basis, are there any other options available to me?
A. Yes, we are able to offer mortgages into retirement via High Street lenders. These can be taken up until age 95 on either a capital repayment or interest only basis.
Q. I have an interest only mortgage coming to an end and no means of repaying it. Is there anything I can do?
A. Yes, we have a number of solutions ranging from building societies that will allow you to repay the capital over a term up until your 95th birthday or lifetime mortgages that will allow you to have the funds on an interest only lifetime basis. If you would prefer another interest only mortgage as you plan to downsize in the future but are not yet ready to do so, then this may also be possible.
Q. Can I take out a mortgage that runs beyond normal retirement age?
A. Yes, we have lenders that will consider a mortgage to age 80 based on earned income (assuming you plan to work until this age) or until age 95 based on sustainable long term income such as pensions, rental income or investment income.
Q. If I have an existing buy to let mortgage that is coming to an end or wish to buy a new buy to let property, what is the maximum age I could take a mortgage to?
A. We have lenders who offer buy to let mortgages with no upper age limits and no personal minimum income requirements.
Q. Can I take out a mortgage that I could repay in the future without penalties?
A. Yes. We have access to a lender that will offer mortgages to age 85 with no early repayment penalties at any stage.
Q. Who can I contact if I have a complaint?
A. You should initially contact our Complaints Officer Simon Stephens on 01543 411085 and if he cannot resolve the issue you can contact The Financial Ombudsman Service (FOS) which is an agency for arbitrating on unresolved complaints between regulated firms and their clients. Full details of the FOS can be found on its website at www.financial-ombudsman.org.uk
Q. Can I obtain a mortgage on an age restricted property or sheltered housing?
A. Yes, we have high street building societies that will consider normal repayment mortgages on age restricted properties to age 85 and also lifetime mortgage providers that will consider lifetime mortgages on age restricted properties.