Lifetime Mortages
Lifetime mortgages are available from age 55 and the amount of money you can raise depends on how old you are, the value of your home and how much you choose to borrow. With a lifetime mortgage you take out a loan secured on your home. This mortgage may be:
- A home income plan - the lump sum is used to buy an annuity which gives you a monthly income.
- An interest only mortgage - you receive a cash lump sum and pay interest on the loan each month.
- A "roll-up" mortgage - rolled up means interest is added to the loan instead of you making a payment each month. This form of lifetime mortgage means the debt increases over time - you receive a regular income and/or a cash lump sum.
The mortgage is repaid from the proceeds of the sale of your home when you die, or if you move out of it (perhaps into a care home when the scheme will usually end and your home will be sold).
The Benefits of a Lifetime Mortgage
- With a "roll-up" scheme, no monthly interest payments are required.
- You are guaranteed occupancy for life.
- You remain the owner of your home.
- Most lenders provide a no negative equity guarantee.
- The cash or income generated can be used as you wish.
The Risks of a Lifetime Mortgage
- With a "roll-up" scheme, interest is likely to roll up quickly increasing the debt.
- It is a long-term arrangement. There are likely to be heavy penalties for cancelling the plan.
- You have no control over the increasing debt and the final figure cannot be predicted accurately prior to death due to unknown life expectancy.
- It may not be possible to move home due to the increased debt.
- Increases in income or capital could result in disqualification from, or reduction of, some state benefits.
This is a lifetime mortgage. To understand the features and risks, ask for a personalised illustration.
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Financial Services Authority.
