Updated 23rd February 2021.
Equity Release and Lifetime Mortgages.
Later living products are becoming increasingly popular as people live longer. As such, some people and have stored up vast sums of equity in their property. Because of this, most of peoples wealth is tied up in their property.
Firstly, It is the job of an lifetime mortgages advisor to help you decide if equity release is right for your individual circumstances. Secondly to explain about the impact to inheritance tax and potential lose of benefits. Therefore, they will be able to make a recommendation based on your current circumstances and future considerations. All the lifetime mortgages experts we work with, will consider every aspects of financial planning to ensure that you are fully protected.
The equity release council was set up in 1991 to provide regulation and guidance to consumers and providers. Click here to access their website
The only way you can truly ensure you are getting the best equity release deals is by using a whole of market mortgage advisor. Because If you go direct to a provider, you are only ever guaranteeing that you are getting the best product that they offer. in addition lifetime mortgages providers have different allowable loan to values for different ages. However, the lifetime mortgages market is constantly changing. to discuss the most up to date criteria speak to one of our whole of market mortgage advisors.
- Don’t borrow the full amount in one go. The sooner you borrow, the more expensive it is, as the interest has longer to compound.
- Ensure you use a company that’s a member of the Equity Release Council.
- Get advice before you do it.
- It can affect your benefits.
What are the benefits of using a whole of market advisor?
Above all, if you are only looking at one provider you will only ever be recommended products from their range. The lender will only be recommending the best product they have to offer. As a result, this could cost you thousands in future interest payments, Getting expert advice is always the correct way. in conclusion, using a whole of market advisor is essential in such a specialist mortgage area.
Our MEO accredited Equity Release advisors are whole of market, with access to all equity release council lenders (as follows):
Legal & General
Our accredited lifetime mortgages advisors will take the time to thoroughly understand your needs and preferences and will only ever recommend equity release if this is in your best interest.
How much equity can I release from my property?
This is down to two main factor. Firstly, the age of the applicant (or youngest applicant when the application is joint) and the value of the property. Secondly, the maximum loan-to value you will be able to access from the equity in your property will be primarily determined by age. However sometimes other factor such as health can also come into play. Your mortgage experts will be have all the up to date information.
Can you use equity release to buy a new home?
It is not a widely known fact that you can purchase a property using a lifetime mortgage . As such, will be subject to the same loan-to-value, age limits and criteria as with a standard equity release mortgage, with the deposit making up the difference between the maximum loan and the purchase price.
Therefore, this option is available for both existing homeowners, and people who do not currently own a property and are looking to get onto the property ladder.
Can I make repayments?
Lifetime mortgages are based on a client’s age and their property value with no compulsory monthly mortgage payments. as a result, these are in no way assessed on standard affordability calculations (meaning you do not need to have a minimum income).
Many clients our accredited equity release advisors have assisted in the past have expressed a preference to pay the interest to avoid the interest rolling up into the loan This is an option, as well as making lump sum payments off the loan, therefore decreasing the amount of interest that is added to the loan.
What are the alternatives?
Lifetime mortgages are not suitable for everyone. The good news is that there are other option available. Such as, through the more widespread options now available for retirement interest only mortgages (RIO’s). This opens up retirement mortgage lending to more people with the more generous affordability that interest only offers. However, this is still assessed on affordability (unlike equity release).
The biggest issue with retirement interest only is that affordability is generally calculated using the lowest income, with most lenders not taking into account widows/widowers pension. There are however, a couple of lenders who are now looking to allow this income in their affordability calculations. Hopefully, more lenders will start to follow suit as the retirement interest only mortgage market evolves.
If you are under 55 years old and looking to release equity from your property, please visit our remortgage page.
Lifetime mortgages myths debunked
There are several myths surrounding lifetime mortgages that have put potential borrowers off exploring the option of a lifetime mortgage. Whereas many of these myths are unsubstantiated, there have historically been times where some of these have been fact. However, the market is now regulated and offers a vast array of product to suit all needs.
When the Equity Release Council relaunched in 2012 it was tasked with safeguarding and protecting the interests of consumers using or considering equity release. As a result, certain key areas were addressed to ensure that the below scenarios could not happen;
- I won’t be able to move home.
- Lifetime mortgages products are portable, meaning that the product can move property with you if you decide to move in the future – subject to still meeting the lenders criteria
- My children will inherit a debt.
- While some older lifetime mortgages plans did allow borrowers to go into negative equity (meaning that there was an amount owing once the property was sold), all new plans have a “no negative equity guarantee”.
- It’s unsafe/unregulated.
- The Equity Release Council heavily regulates the equity release market, with all plan providers and advisors being subject to their guidelines.
- I’ll risk losing my home.
- You can remain in your home for life..
- I won’t be able to leave an inheritance.
- On sale of the property all remaining proceeds after repaying the loan belong to you.
Speak to an equity release mortgage expert
Equity release or life time mortgages can often seem daunting As such, we ensure the advisors we work with will explain the process from start to finish with you and your family.
In addition the equity release mortgage advisors will look at each case before deciding which lender is right for you. The mortgage brokers we work with are whole of market and offer unbiased advice. They will have access to all the lenders to really enhance your chances of achieving the mortgage you need.
Therefore, the expert brokers we work with have experience in dealing with all aspects of lifetime mortgages, in addition to using the whole of the market to access the best deals available.