What is a Lifetime Mortgage?

This residential property mortgage is like a loan or debt with no fixed repayment date and usually no monthly payments secured on the property. The outstanding amount of capital and accumulated interest is repaid whenever the house is sold.

Are there differences between a Lifetime mortgage and a Standard mortgage?

Lifetime mortgages differ in several ways compared to a standard mortgage. The main difference is the lending criteria on a Lifetime mortgage is that the loan amount lenders are prepared to offer to a borrower is based upon the age of the youngest borrower and the value of the property.

Usually borrowers will never repay the loan amount to the lender in their lifetime, because it is only repaid whenever the house is sold, which occurs when the last surviving borrower either dies or moves permanently out of the home.

Lifetime mortgages are only offered by Specialist lenders, some of who are members of a trade organisation called Safe Home Income Plans Ltd (SHIP) who abide by a voluntary code of practice. One of these is a ‘No negative equity guarantee’ to borrowers, which means they (or their estate) will never owe the lenders more than the value of the property.  

Types of Borrower

A key feature of a Lifetime mortgage is that they are designed for older homeowners to release cash (or equity) from their homes, without having to pay anything back to the lender during their lifetime.

You could be an older first time buyer, a home mover or remaining in your home and just changing your mortgage – i.e. remortgaging.

Reasons for Mortgaging

You could be borrowing money to purchase a property or raising capital for home improvements, holiday, business venture, car purchase or consolidating debts – i.e. releasing equity, or simply moving your mortgage to get a better deal – i.e. pound for pound mortgage transfer or remortgaging. You may even be doing all of these at the same time!

Types of Mortgage Repayment Methods

When you take out a Lifetime mortgage or loan, you usually do not make any repayments to the lender until the last surviving borrower either dies or moves permanently out of the home. This could mean selling the property and moving to a new home, or into permanent long term care.

How do I get a Lifetime mortgage?

The first and most important step after you have decided you may want a Lifetime mortgage is to have a discussion with us to provide you with independent financial advice.

Once we have agreed what the most suitable Lifetime mortgage is for your particular circumstances (having taken into consideration your income, expenses and state benefits) we make an application on your behalf to take out a loan based on how much income or lump sum you require, your age and the value of the property agreed between you and the lender.

Want to know more?

Talk to one of our qualified financial advisers on 01553 777600 or e-mail us at enquiries@ringassociates.co.uk

Also you may want to read the free download publication from the Financial Services Authority titled ‘Equity Release-Raising money from your home’ by accessing the following website www.moneymadeclear.fsa.gov.uk/pdfs/equity_release.pdf

Details of the SHIP members’ Code of Practice can be read on the free download publication by accessing the following website www.ship-ltd.org/img/safe_ship.pdf

You may also want to review your eligibility to state benefits by accessing the Department of Works and Pensions website www.dwp.gov.uk/lifeevent/benefits  

and the Citizens Advice Bureau (CAB) websites www.citizensadvice.org.uk/bureau

and www.debtline-online.co.uk/Benefits%20Advice.asp