If you're over 55 and own your own home, you may be able to release some of the money that's tied up in it. This is called equity release.
One type of equity release is a lifetime mortgage. This is a special type of loan that's secured against your property, but you don't have to make any repayments to the lender. The interest rate is usually fixed for life, but you can choose to make repayments if you want. All loans are repaid when the second borrower either passes away or goes into long term care.
At this point, your estate will sell your property and the money will be used to pay off the loan. Any money left over will go to your beneficiaries or be used to pay for your care, if needed.
There are two types of lifetime mortgages:
- Lifetime mortgage: This gives you a lump sum payment. The minimum loan is £10,000 and your property must be worth at least £100,000. Interest is calculated on the full amount borrowed from the start of the plan.
- Drawdown lifetime mortgage: This gives you an initial payment and then access to more money, up to a pre-agreed limit, later on. This allows you to take out money when you need it and only pay interest on the money you've borrowed. This can be a more cost-effective way to borrow money.
Even though it's called a "lifetime mortgage" and the interest rate is "fixed for life," you can still remortgage or re-broke your equity release plan. This means that if you find a better offer, we can help you switch to a different plan that offers you better value.
