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Lifetime Mortgages FAQs

How much money could I release? 

This will depend on your age, the value of your home and whether you still have a mortgage to clear.  Typically, people will release between 20% and 50% of the equity in their home. Given how house prices have risen over time this could be a significant sum.  For example, if your house is worth £300,000 and you have a £50,000 mortgage you will have £250,000 in equity.  Depending on your age this means you could release up to £137,500. 

Equity Release loans generally start from around £10,000, with the average size loan around £95,000.

Try our lifetime mortgage equity release calculator, to see how much equity you could release.

How long does it take to arrange?

With our experienced and helpful team, Jerry and Lyndsey, working efficiently on your behalf, the average time from application to receiving your money is usually between 4 to 6 weeks.

What about my partner? - Can we take out a joint equity release?

If you are both over 55 and married, in a civil partnership or living together in a long-term relationship, you can apply for a joint equity release.  That way if one of you goes into long term care or passes away the other can remain living in the house.  If only one of you applies for equity release and should die or go into care, your surviving partner would have to either repay the loan or sell the property.

Is my house at risk?

Unlike an ordinary mortgage where your home is at risk if you don’t keep up with your monthly payments, there are no monthly payments with a lifetime mortgage, so there’s no risk of falling into arrears.  However, as with any contract, you do still need to abide by the terms and conditions of the agreement.

How will a lifetime mortgage impact on any inheritance that I leave to my family?

If you choose to roll up the interest on a lifetime mortgage this will impact on the value of your estate, as the lender will add these charges to the original loan, which then has to be repaid when you pass away or go into long term care.  This means there will be less for your family to inherit so you need to make sure you are happy with this potential outcome before deciding to take out a lifetime mortgage.

What are the costs of taking out a lifetime mortgage?

Lender fee – most lenders will charge a fee for setting up the plan, which usually range between £600 to £2000.  You can either pay this upfront, add it to the cost of the loan, or have it deducted from the loan, meaning that you receive less than the full loan amount as the lender fee has been deducted.

Broker fee – We actually don’t charge a broker fee – unlike most brokers who do charge a fee for arranging lifetime mortgages.

Valuation fee – the lender will need to send a valuer to undertake a valuation of your home as they will need this to base their offer on. Depending on the loan plan that you are opting for, you may need to pay the valuation fee. Some plans have free valuations.

Solicitor fee – You’ll need a solicitor to provide legal advice and oversee the legal documentation needed for your equity release plan.

What happens if I still have a mortgage?

You can still take out an equity release plan if you have a mortgage, but you will have to clear this from either the money that you receive or from other funds.

What does ‘no negative equity’ mean?

This means that even if the value of your property were to fall, you will never owe back more than your property is worth.  If when your property is sold there isn’t enough money to cover repaying the loan and the interest charges, the lender will write this off.

Lifetime Mortgages Jargon buster

AER – Annual Equivalent Rate

This is the actual rate of interest you will pay once the effect of compound interest is taken into account.

APR - Annual Percentage Rate

This is the annual rate of borrowing, including any upfront fees and charges but not taking account of the impact of compound interest.

Drawdown

Some equity release products will allow you to draw down money as you need it, rather than in one lump sum, up to an agreed limit.  Interest is then only charged on the amount that you have drawn down.

Inheritance Protection

Lifetime mortgages with inheritance protection allow you to protect a percentage of the value of your property, which you can then leave as part of your estate.

No Negative Equity Guarantee

Most lifetime mortgages contain a no negative equity guarantee that means you will never owe more than the value of your property.

Early repayment charge

Lifetime mortgages are taken out on the basis that they aren’t repayable until you either pass away or go into residential care.  If you repay the loan early there may be an early repayment charge applied.

LTV - Loan To Value

This is the ratio between the value of your property and the size of the loan that you want to take out, shown as a percentage.

For example, if you want to borrow £100,000 from a house valued at £400,000 the LTV would be calculated as:

100,000 / 400,000 = 0.25 x 100 = 25%

Equity Release Council

The Equity Release Council is the industry body who ensure that all members act in accordance with their strict code of conduct when providing equity release advice and services to customers.

Portable

Some equity release plans are portable which means you can move house and take the plan with you, provided the new property meets the lender’s lending criteria.

Right to Remain

This guarantees you the right to remain in your property until you either pass away or move into long term care, so long as you continue to comply with the terms and conditions set out in the plan – such as keeping the house in a good state of repair.

Waiver of Occupancy

Anyone over 17 living in the property and who is not party to the equity release plan, will be required to sign a waiver of occupancy.  This means that if the plan ends, either due to the plan holder passing away or going into long term care, the other occupants’ right to reside there will cease.  This will then enable the lender to sell the house to repay the loan.