What type of plan is best for me
You release a tax free cash lump sum from your home to spend as you like. There are no monthly repayments to make ever for the rest of your life. Interest is chargeable and is added to the loan each month. You are NOT selling the house and can remain in your home for the rest of your life. The amount you borrow and the accumulated interest is repaid when you die, permanently leave the house or move into long term care and the house is sold. If you have a joint loan your partner can remain in the home without the need to sell the home or repay or the loan.
Home Reversion Plans
Unlike a Lifetime Mortgage with a Home Reversion Plan you sell part or all of the ownership of your home. You still receive a tax free cash lump, however no longer own part or all of your home. You are entitled to remain in the property, rent free, for the rest of your life. These plans are also known as Lifetime Lease plans. The amount you would receive as tax free cash lump will be lower than the market value of your property.
Other options that can be included within a Lifetime Mortgage
Lifetime Mortgages are becoming more and more flexible with new options and developments being included by providers all the time. Some important options to think about when selecting a Lifetime Mortgage include:
You do not have to take the maximum amount equity from your home in one go. If you think you will need or would like to take a further lump sum in the future you can take a smaller sum initially and take further amounts as and when you need, up to the maximum amount you can borrow. Interest will only accrue on the amounts you withdraw.
If you want to pay off some of the interest that is accruing on the loan you can make voluntary payments as and when you want of up to 12.5% of the loan each year. These payments can be made in lump sums or in installments. Some providers will allow you to repay the original loan over time without incurring early repayment charges.
If you want to guarantee an inheritance to your family or estate when the loan is repaid you can select a certain percentage of the property is ‘ring fenced’ for inheritance purposes. The percentage you select will be guaranteed to be paid to your family or estate when the loan is repaid and will be covered by the No Negative Equity guarantee, so even if the loan is more than the value of the property when it is repaid this ring fenced amount will not be touched.
If you are considering moving properties or looking to downsize at some point in the future you could potentially face an Early Repayment Charge, which could be up to 25% of the loan amount. Including downsizing protection in your plan will mean you would not face an early repayment charge and could move the Lifetime Mortgage to a new property, subject to the property meeting the lenders criteria.
Medically enhanced plans
If you have any health issues or lifestyles issues you could be offered a plan based on an assessment of these medical conditions that could offer more favourable deals, such as a higher loan amount or lower interest rates.
If you want to reduce the amount of interest accruing you can make voluntary ‘overpayments’ to the loan of up to 15% of the amount outstanding each year without incurring any penalties. These overpayments are completely voluntary and can be made on an ad hoc basis or on a regular basis should you wish. Not only could you reduce the amount of interest accruing, but also repay part or all of the original loan over time.
We will look at all the different options that would be most suitable for you and ensure we recommend a plan that has all the flexibility that you need, not only now but in the future.
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