Question 1

What is a lifetime mortgage?

Accepted Answer

A lifetime mortgage is a type of equity release available to homeowners aged 55 and over. It is a way to borrow money secured against your home while retaining ownership of the property.The loan, together with any interest that has been added, is usually repaid when the last borrower dies or moves permanently into long-term care.

Question 2

How does a lifetime mortgage work?

Accepted Answer

A lifetime mortgage is secured against your home, similar to a traditional mortgage. You can choose to receive funds as a lump sum, in smaller amounts over time, or a combination of both, depending on the product selected.Interest is added to the loan each year on the amount borrowed, however, you can make optional repayments to cover it, and stop the balance increasing.There are plans that may allow you to make voluntary payments subject to certain limits. Early repayment charges may apply above a set value.

Question 3

With a lifetime mortgage will I still own my home?

Accepted Answer

Yes. With a lifetime mortgage, you remain the legal owner of your property.As long as you comply with the terms and conditions of the mortgage, you can continue living in your home for the rest of your life or until you move permanently into long-term care.

Question 4

What is the minimum age for a lifetime mortgage?

Accepted Answer

Lenders require applicants to be at least 55 years old.If a property is jointly owned, both applicants must meet the lender's age criteria.

Question 5

How much money can I release with a lifetime mortgage?

Accepted Answer

The amount available depends on several factors, including:Your ageThe value of your propertyThe lender's criteria
In general, older applicants may be able to access a higher percentage of their property's value.

Question 6

Do I need to have my property valued for a lifetime mortgage?

Accepted Answer

Yes. Before a lender makes a formal offer, an independent valuation of the property will be carried out.This helps determine how much may be available to borrow and confirms that the property meets the lender's requirements.

Question 7

What types of property are accepted for a lifetime mortgage?

Accepted Answer

Many UK properties are acceptable security for a lifetime mortgage, including houses, bungalows and some flats.However, acceptance depends on the lender's property criteria, construction type and condition of the property.

Question 8

Can I get a lifetime mortgage if I still have an existing mortgage?

Accepted Answer

Yes. It is possible to take out a lifetime mortgage if you currently have an existing mortgage, but this will need to be repaid as part of the arrangement.You could use the funds released to do this.

Question 9

Can I apply for a Lifetime Mortgage jointly with my partner?

Accepted Answer

Yes. Joint lifetime mortgage applications are common.The mortgage term ends when the last surviving borrower dies or moves permanently into long-term care.

Question 10

What can I use the money released from a lifetime mortgage for?

Accepted Answer

The money released from a lifetime mortgage can be used for many different purposes.Common reasons include:Home improvementsRepaying an existing mortgageSupporting family membersPurchasing another propertyEnhancing quality of lifeHolidaysLarge purchases such as a car.

Question 11

Can I take the money from a lifetime mortgage in stages?

Accepted Answer

Many modern lifetime mortgages offer a drawdown facility.This allows you to take an initial amount and then access further funds in the future if required, subject to the terms of the plan

Question 12

How long does the process take to get a lifetime mortgage?

Accepted Answer

While timescales vary, a typical lifetime mortgage application may take between six and ten weeks from initial enquiry to completion.This can depend on factors such as property valuation, legal work and lender processing times.

Question 13

Do I have to make monthly repayments with a lifetime mortgage?

Accepted Answer

No. One of the key features of lifetime mortgages is that there is no requirement to make monthly repayments.Instead, the interest is added to the loan and repaid when the mortgage ends.

Question 14

Can I make repayments to a lifetime mortgage if I want to?

Accepted Answer

Yes. There is the option to make voluntary repayments, subject to product terms and limits. Early repayment charges may apply above a set value.Making voluntary repayments will reduce the overall cost of borrowing over time.

Question 15

What happens if I stop making voluntary repayments on a lifetime mortgage?

Accepted Answer

Voluntary repayments on a lifetime mortgage are optional.If you choose to stop making them interest will be added to the outstanding balance.

Question 16

What interest rate will I pay on a lifetime mortgage?

Accepted Answer

The interest rate depends on the lender and product selected.Most lifetime mortgages have a fixed interest rate for life, giving certainty about how interest will be calculated throughout the duration of the mortgage.

Question 17

How does interest affect the amount owed on a lifetime mortgage?

Accepted Answer

If no repayments are made, interest is added to the outstanding balance.This means interest is charged on both the original loan and previously added interest, which will cause the balance to increase over time.Your adviser should provide personalised illustrations showing how this will affect your circumstances.

Question 18

Can I move house after taking a lifetime mortgage?

Accepted Answer

Lifetime mortgages are portable, meaning they can potentially be transferred to another property in the future.The new property must meet the lender's lending criteria at the time of the move.

Question 19

What happens if I want to downsize, if I have a lifetime mortgage?

Accepted Answer

You have the option to downsize and repay some or all of the lifetime mortgage if you choose, however this could incur early repayment charges.Some plans include downsizing features which may allow the lifetime mortgage to be repaid without an early repayment charge in specific circumstances.The availability of this feature depends on the lender and product selected.

Question 20

Are there any fees involved with a lifetime mortgage?

Accepted Answer

There will be costs associated with arranging a lifetime mortgage, including:Advice feesValuation fees (where applicable)Solicitor feesLender arrangement fees
Your adviser should explain all applicable costs before proceeding.

Question 21

Are there early repayment charges with a lifetime mortgage?

Accepted Answer

Some lifetime mortgages include early repayment charges if the loan is repaid sooner than expected.The way these charges are calculated varies between products, so it is important to understand the terms before proceeding.

Question 22

What happens to my lifetime mortgage when I die?

Accepted Answer

When the last borrower dies, the property is usually sold, and the proceeds are used to repay the outstanding mortgage balance.Any remaining proceeds belong to the estate.

Question 23

What happens to my lifetime mortgage if I move permanently into long-term care?

Accepted Answer

If the last remaining borrower moves permanently into long-term care, the mortgage will become repayable.The property is typically sold and the proceeds used to repay the outstanding balance.

Question 24

Can I protect some of my property's value with a lifetime mortgage?

Accepted Answer

Some lenders offer features that may allow a proportion of the property's future value to be protected.  This will reduce the amount available to you.Availability and eligibility depend on the lender and product selected.

Question 25

Is a lifetime mortgage suitable for everyone?

Accepted Answer

No. A lifetime mortgage will not be suitable for everyone.There are advantages and disadvantages to consider, and alternative options may be more appropriate depending on your circumstances.This is why regulated advice is required before proceeding

Question 26

Why is regulated advice required for lifetime mortgages?

Accepted Answer

Lifetime mortgages are regulated mortgage products.A qualified adviser is required to assess your circumstances, explain the features and risks, consider available options and determine whether a lifetime mortgage is suitable for your needs.

Question 27

Why do I need a solicitor for a lifetime mortgage?

Accepted Answer

Independent legal advice is a requirement when taking out a lifetime mortgage.Your solicitor will explain the legal implications of the mortgage and ensure you understand the commitments you are making before completion.

Question 28

What happens during the advice process for a lifetime mortgage?

Accepted Answer

The advice process typically includes:Understanding your objectives.Gathering information about your circumstances.Explaining how lifetime mortgages work.Discussing benefits and risks.Considering available options.Providing a personalised recommendation if appropriate.Supporting you through application and completion.

Question 29

Is there a guarantee with a lifetime mortgage that I will never owe more than my home is worth?

Accepted Answer

Lifetime mortgages from members of the Equity Release Council include a No Negative Equity Guarantee.This means that when the property is sold after the mortgage ends, neither you nor your estate will be required to repay more than the sale proceeds of the property, provided the terms and conditions of the mortgage have been met.

FAQ

Frequently asked questions