Lifetime mortgages can be a beneficial option for homeowners over 55 who want to unlock equity from their property without having to sell their home. These types of mortgages allow you to access a portion of your home's value as tax-free cash. Nevertheless, equity release / lifetime mortgages might not be suitable for everyone, as the interest is normally compounded, meaning the debt can grow swiftly over time. It's important to weigh the long-term financial implications before deciding if a lifetime mortgage is the right choice for you.
Yes, you can sell your house even if you have a lifetime mortgage, although the loan must be repaid in full when you sell the property. This could include any accumulated interest on the loan, so it's essential to consider this when if you are planning to sell. It's advisable to consult with us at My-Later Life or a financial advisor to understand the full implications of selling your home with a lifetime mortgage.
A lifetime discount mortgage often comes with a lower initial interest rate, but there are potential downsides. Over time, the interest rate might increase, making your repayments higher. Additionally, if you need to move or sell your property, you may face early repayment charges. It's crucial to consider these factors and consult with a mortgage advisor to see if a lifetime discount mortgage aligns with your financial goals.
For individuals over 55, a lifetime mortgage can provide a way to supplement retirement income, fund home improvements, or even help family members financially. Since repayments are not typically required until you pass away or move into long-term care, it can be a flexible option. However, it's essential to understand the long-term financial impact, particularly how the interest can compound over time, reducing the equity left in the home.
At the end of a lifetime mortgage, the loan plus any accrued interest must be repaid. This usually happens when the homeowner passes away or moves into permanent long-term care. The repayment is typically made through the sale of the property. If the property's value exceeds the amount owed, any remaining equity is passed on to your estate or beneficiaries.
The maximum age for a lifetime mortgage varies by lender, but it generally ranges from 85 to 95 years old. Some providers may have specific conditions or offer products that cater to older borrowers. It's advisable to check with us at My Later Life and we will check with the individual lenders to understand their criteria and determine which option best suits your needs.
A lifetime mortgage is a type of equity release, but not the only kind. Equity release is a broader term that includes various financial products allowing homeowners to access the equity tied up in their property. A lifetime mortgage specifically lets you borrow money against the value of your home, with the loan repaid from your estate when you pass away or move into long-term care. Other types of equity release, like home reversion plans, involve selling part or all of your property to a provider in exchange for a lump sum or regular payments. The key difference lies in how you access the funds and the ownership of your home.
While equity release can be a useful way to access cash, there are some downsides to consider. The interest on a lifetime mortgage, for example, compounds over time, which can significantly reduce the equity left in your property. This means less inheritance for your beneficiaries. Additionally, early repayment charges can be substantial, and your ability to move house may be restricted. It's important to weigh these potential drawbacks against your financial needs and long-term goals.
The average interest rate on a lifetime mortgage in the UK typically falls between 3% and 6%. However, the rate you receive can depend on various factors, such as the lender, the amount borrowed, and your age. My-Later Life is a whole of market lender and we will compare offers from multiple providers and help you make an informed decision alternatively you can consider seeking advice from a financial advisor.
Whether there's a better alternative to equity release depends on your individual circumstances. Other options might include downsizing to a smaller home, remortgaging, or exploring retirement interest-only mortgages (RIOs). These alternatives might be more cost-effective depending on your situation, especially if you want to preserve more of your property's equity. It's crucial to explore all available options and if needed consult with a financial advisor to find the best solution for your needs.
Yes, with a lifetime mortgage, which is a type of equity release, you continue to own your home. The lender places a charge against the property, like a traditional mortgage, but you remain the owner. However, with a home reversion plan (another type of equity release), you sell part or all of your home to the provider, meaning you no longer fully own the property. Understanding the type of equity release you're considering is key to knowing your rights and obligations.
A lifetime lease can offer security in knowing you can stay in your home for life, but there are disadvantages. For instance, you typically cannot benefit from any future increases in property value, and your ability to make changes to the property might be limited. Additionally, lifetime leases can make it harder to sell the property, as they might not appeal to all buyers, which could impact its market value.
The conditions of a lifetime mortgage can vary between lenders, but common requirements include a minimum age (usually 55 or 60), owning your property outright or having a small remaining mortgage, and ensuring the property meets certain standards (such as being your main residence). Other conditions might include restrictions on renting out the property or making significant alterations without lender approval. It's essential to review the specific terms of the mortgage with your lender or speaking with us at My Later Life to fully understand the conditions involved.
Lifetime mortgages are often seen as expensive due to the compounding nature of interest. Unlike traditional mortgages, where interest is typically paid monthly, interest on a lifetime mortgage is usually added to the loan amount, meaning the debt grows over time. Additionally, there may be initial setup costs, including arrangement fees, legal fees, and valuation costs. The perceived expense is also due to the long-term nature of the loan, which might last many years, significantly increasing the total amount owed.
In general, the older you are, the more you can borrow through equity release, and the interest rates offered may be more favourable. This is because lenders view older borrowers as lower risk, given that the loan term is likely to be shorter. However, the decision to opt for equity release should not be based solely on age. It's important to consider your financial needs, future plans, and other available options before making a decision.
Whether it's better to remortgage or release equity depends on your financial goals and situation. Remortgaging might be a better option if you're looking for a lower interest rate and want to continue making monthly repayments. On the other hand, equity release could be more suitable if you need a lump sum or regular income without the burden of monthly payments. Each option has its own set of benefits and drawbacks, so it's essential to weigh them carefully and possibly consult us at My-Later Life or speak with a financial advisor to determine the best path for you.
Several banks and financial institutions in the UK offer lifetime mortgages, including large and reputable names like More to Life , Legal & General , LVE, and Aviva. These institutions provide different lifetime mortgage products tailored to various customer needs. My later life is a whole of market supplier and we advise our clients to let us shop around and compare offers from multiple lenders to find the best deal that suits your situation.
Yes, it is sometimes possible to get equity release if you have spray foam insulation installed in your loft, but it can complicate the process. Lenders may have concerns about the presence of spray foam insulation, particularly because it can affect the structural integrity of the roof and make the property harder to value or sell in the future.
Here are some key points to consider:
If we still can't get you and offer, we have several companies we deal with that can remove the spray foam from your property.
It's important to discuss your situation with your us at My Later Life and the lender to understand how to spray foam insulation might affect your application.
Yes, there are several alternatives to a lifetime mortgage. These include:
Each alternative has pros and cons, so assessing which option best aligns with your financial goals and personal circumstances is essential.
To qualify for a lifetime mortgage, you generally need to meet the following criteria, which we will talk through with you:
Lenders will also consider your health and life expectancy when determining how much you can borrow.
No, with a standard lifetime mortgage, you do not make monthly repayments. Instead, the interest is added to the loan balance, and the total amount is repaid when you pass away or move into long-term care. However, some products allow for voluntary or partial repayments, which can help reduce the amount of interest that accrues over time.
Yes, you can pay back a lifetime mortgage, either in part or in full, but there may be early repayment charges depending on the terms of your agreement. Some lenders offer flexible options that allow for partial repayments without penalty, which can help reduce the overall cost of the loan. It's important to check the specific terms with your lender to understand any potential costs associated with early repayment.
With a lifetime mortgage, you retain ownership of your property. The lender places a charge on your home, similar to a traditional mortgage, but you remain the legal owner. The loan, along with any accrued interest, is repaid when the property is sold, usually after you pass away or move into permanent care.
The process of securing a lifetime mortgage typically takes between 6 to 8 weeks from application to completion. Here at My Later Life always under promise over deliver and we will always ednevor to get you your payment as quickly as possible. The timeframe includes stages such as financial advice, application processing, property valuation, and legal work. However, the timeline can vary depending on the complexity of the case and the efficiency of the involved parties.
The disadvantages of a lifetime mortgage include:
It's crucial to fully understand and consider these drawbacks in the context of your financial goals before proceeding with a lifetime mortgage.
The amount of interest you will pay on an equity release product, like a lifetime mortgage, depends on the interest rate, the amount borrowed, and the length of time the loan is outstanding. Since interest on lifetime mortgages compounds, the total interest paid can be significant over time. For example, if you borrow £50,000 at an interest rate of 5% per year, the loan could double in size in approximately 14-15 years due to the effect of compound interest. It's important to use an equity release calculator or speak with a financial advisor to get an accurate estimate based on your specific circumstances.
The cost of a lifetime mortgage includes several components:
Overall, the total cost can vary widely depending on the amount borrowed, the interest rate, and how long the loan is in place.
The maximum percentage of your property's value that you can borrow with a lifetime mortgage typically depends on your age and the value of your home. Generally, the older you are, the more you can borrow. For example, someone aged 55 might be able to borrow up to 20-25%of their property's value, while someone aged 85 might be able to borrow up to 50%. However, these percentages can vary between lenders and depending on the specific product chosen. It's important to let My later Life get you some personalised quotes to understand your borrowing capacity.
Whether there is a better alternative to equity release depends on your individual circumstances and financial goals. Some potential options include:
Each option has pros and cons, so assessing them carefully is important based on your financial needs and long-term goals.
Whether a lifetime mortgage is worth it depends on your personal circumstances, financial needs, and long-term goals. Here are some factors to consider:
In summary, a lifetime mortgage can be a valuable tool for accessing the equity in your home, especially if you need funds for retirement and want to stay in your property. However, it's important to carefully consider the long-term financial implications and explore all alternatives before making a decision. Consulting with a financial advisor can help you determine if a lifetime mortgage is the best option for your situation and we can assure you using My Later Life can help with all of your equity release needs.
Equity release has had a bad press in the past due to:
However, modern equity release products are much better regulated, with safeguards like the no negative equity guarantee in place to protect consumers.
The main downfall of equity release is the rapid accumulation of debt due to compounding interest, which can significantly reduce the equity left in your property. This can impact the inheritance you leave behind and limit your financial flexibility. Additionally, equity release can affect eligibility for certain state benefits, and early repayment charges can make it difficult to exit the agreement if your circumstances change.
Equity release itself does not directly affect your state pension, as the state pension is not means-tested. However, if you receive means-tested benefits like Pension Credit or Council Tax Reduction, the lump sum or income you receive from equity release could affect your eligibility for these benefits. It's important to check how any additional income or capital might impact your entitlement to such benefits.
With most equity release plans, you do not have to make monthly repayments. Instead, the loan, along with any accrued interest, is repaid when you sell your home, typically upon your death or if you move into long-term care. Some modern plans allow you to make voluntary payments to reduce the balance or interest, but this is optional.
Whether a remortgage or equity release is better depends on your specific circumstances:
A remortgage might be better if you have sufficient income to make repayments, while equity release might be preferable if you want to unlock cash without the burden of monthly payments.
The maximum amount you can get on equity release typically ranges from 20% to 60% of your property's value, depending on:
Consulting with multiple providers and using equity release calculators can help determine the maximum amount available to you based on your specific circumstances.
The negatives of equity release include:
Yes, equity release can be refused for several reasons:
The amount of money you can get from equity release depends on several factors:
Using an equity release calculator or consulting with a financial advisor to get a more accurate estimate based on your circumstances is recommended.
Equity release is governed by several rules to protect consumers:
Equity release allows homeowners to access the equity (cash) tied up in their property without having to sell it. There are two main types:
Generally, if you meet the basic eligibility criteria, it's not difficult to get equity release. However, the ease of approval depends on:
Most reputable equity release providers will offer a straightforward application process, and independent financial advice is required to help guide you through it.
The minimum age for equity release is typically 55 years old. There is no strict maximum age, but lenders may have their own limits, often around 95-100 years old. However, the older you are, the more favourable the terms might be, including the amount you can borrow.
Yes, there are risks associated with equity release:
Yes, you can move after taking out an equity release policy, but there are some considerations:
No, equity release is not just a remortgage. While both involve borrowing against the value of your home, they have different structures and purposes:
Equity release is more suitable for older homeowners looking to access cash without the burden of monthly repayments, while a remortgage is typically used by those with a steady income looking to refinance or borrow more.
The costs of equity release in the UK can vary depending on the provider and the specific plan chosen. Here are the typical costs involved:
While equity release can be an attractive option, there are some hidden or less obvious costs to consider:
Here are four lesser-known aspects of equity release:
The main pitfalls of equity release include:
The amount you can borrow with a lifetime mortgage typically depends on your age, the value of your property, and the specific product chosen. Generally, you can borrow between 20% to 60% of your home's value. Older borrowers and those with higher-value properties can usually borrow a higher percentage.
A lifetime mortgage is typically paid off when the property is sold, either after the borrower passes away or moves into long-term care. The sale proceeds are used to repay the original loan amount plus any interest that has accrued over time. If the property is worth more than the outstanding debt, the remaining equity goes to the borrower or their estate.
Interest rates on lifetime mortgages in the UK generally range from around 5% to 7%, though this can vary depending on the provider, the product, and individual circumstances. Rates can be either fixed for life or variable, but most lifetime mortgages offer fixed rates, providing certainty over how much the loan will cost in the long run.
While you won't lose your house in the conventional sense with a lifetime mortgage (as you retain ownership), there are some risks. If you breach the terms of the agreement, such as failing to maintain the property or not living in it as your main residence, the lender could force a sale. However, reputable equity release products come with a "no negative equity guarantee," ensuring that you or your estate will never owe more than the value of the home when it is sold.
If you inherit a house with an equity release plan, the debt must be repaid. Typically, this is done by selling the property. The proceeds from the sale are used to repay the equity release loan, including any accrued interest. If the sale of the house covers the debt, any remaining equity would go to the inheritors. If the inheritors want to keep the house, they would need to repay the debt through other means, such as by taking out a mortgage.
Yes, it is possible to transfer a lifetime mortgage to another property, but the new property must meet the lender's criteria. This process is known as "porting" the mortgage. The new property must typically be of equal or greater value and must also be of standard construction and in good condition. If the new property is of lower value, you may be required to repay a portion of the mortgage to maintain the loan-to-value (LTV) ratio.
Equity release can be a good idea for some, especially those who are property-rich but cash-poor, need extra income in retirement, or wish to avoid downsizing. However, it's not suitable for everyone due to the long-term financial implications, such as reduced inheritance and the accumulation of interest. It's essential to weigh the pros and cons and consult with an independent financial advisor before proceeding.
The key differences between a lifetime mortgage and a residential mortgage include:
The total amount you will pay back with an equity release depends on the amount borrowed, the interest rate, and the length of time the loan is outstanding. For example, if you borrow £100,000 at an interest rate of 6% and live for another 20 years, the debt could more than triple to around £320,000 due to compound interest. It's crucial to consider how long you might live and how the interest will accumulate over that period.
Equity release can be worth considering if you need access to cash in retirement and don't want to sell your home or downsize. It allows you to tap into the value of your property without moving, providing a source of tax-free cash. However, it's essential to weigh the long-term financial implications, such as the impact on your estate and potential reduction in benefits. Seeking advice from an independent financial advisor is crucial before making a decision.
No, you do not typically pay monthly interest on equity release. Instead, the interest accrues over time and is added to the loan balance. The loan, including the accumulated interest, is usually repaid when the property is sold after you pass away or move into long-term care.
Equity release is generally more expensive than a traditional loan due to higher interest rates and the compounding nature of the interest over a long period. However, it offers benefits like no monthly repayments and the ability to stay in your home, which might make it more suitable depending on your circumstances. Traditional loans might have lower interest rates, but they typically require regular repayments.
Yes, you will need a solicitor for an equity release. The legal process ensures that you fully understand the terms and implications of the equity release plan. Your solicitor will also handle the paperwork, ensure the transaction is legal, and provide independent advice, which is a crucial requirement for equity release schemes.
The pitfalls of equity release in the UK include:
Yes, it is possible to buy yourself out of equity release, but it can be costly. You would need to repay the amount borrowed plus any accumulated interest. Some products have early repayment charges, which can be significant, depending on how long you've had the plan. It's important to check the terms and conditions before deciding to pay off an equity release early.
The cash you receive from equity release is tax-free, as it's considered a loan rather than income. However, if you invest the money or use it in a way that generates income, such as putting it into savings or investments, that income may be subject to tax. Additionally, equity release can affect your eligibility for means-tested benefits, which could indirectly impact your financial situation.
If you don't have anyone to leave your assets to, equity release might be a good option. However, if you do have family to inherit your assets, it's worth considering that you may leave them with less inheritance. On the other hand, you might want to release equity to gift money to family members before you pass away.
If your equity release lender ceases trading, their existing plans will be transferred to another lender. The new lender is required to honour the original terms of the agreement exactly as it was initially established.
A further advance from your existing equity release provider can give you the required funds. However, you are, in effect, taking out a brand-new plan which is separate from the old one, with different terms and its own interest rate. In order to obtain a further advance, you must receive additional financial advice, which could entail a Broker Fee, and a new survey will need to be completed on your home, incurring a Valuation Fee when an offer is issued, it will incorporate a Lenders Fee. The terms and interest rate on your existing equity release remain unchanged. So, whilst a further advance is quite often the fastest way to release additional funds, it may not be the most cost-effective.
This is where a reserve amount of future lending has been pre-agreed by the Lender at the time of the original offer. You take an initial lump sum, and the rest is kept in a cash reserve facility, ready for you to 'draw down' whenever you require. Then, you can release smaller amounts as and when you need them. Interest is only added to the money you've drawn down – rather than on the whole amount you borrow for the duration of the plan. And because the drawdown has already been pre-approved, there are no additional lender fees, Valuation fees or Broker fees. It's a very cost-effective way to borrow additional funds - although beware as it will often attract a slightly higher interest rate on the original amount borrowed. The interest rate on the drawdown may also vary from the interest rate on the original loan amount.
Although interest is charged on the original loan amount, there is no interest changes on the drawdown facility until you physically draw down the funds. The minimum amount can be as little as £500 or could be considerably more up to the level of the previously agreed drawdown facility. And as I have mentioned before, be aware that the interest rate on the drawdown may well differ from the interest rate borrowed on the original loan amount.
In short, compound interest works by charging interest on the total amount of the loan, including the interest that has already built up. This therefore gains momentum as the years role by. Let me explain. If you borrow £100,000 at an interest rate of say 5%. then £5,000 is added onto the loan at the end of year 1, so you will then owe £105,000. At the end of year 2, interest at 5% is charged on the £105,000 loan. This adds another £5250 pounds which means the total loan is £110,250. So be aware, as the compound interest grows the loan amount increase at a much higher rate over time. This is no different to any other standard UK mortgage, but the main difference is that you are not required to pay anything back, in which case the loan increases exponentially.
There are always three situations where Early Redemption penalties are NEVER charged. The first one is on the passing of the any parties who have taken out the Equity Release product. So if the Early Redemption Penalties were for 10 years and the first party passed after 2 years and the second party passes after 7 years, there would be no Early Redemption Penalties to pay. The second one is when the last of the two borrowers has to go into long term care. This is as opposed to WANTING to go into long term care, and in that case, it may well be that there are Early Redemption Penalties. The final situation where charges are not applied is that on the passing of the first party, the second party has a 3 year window where they can pay off the Equity Release without any Early Redemption charges.
Lenders will usually allow homeowners to move home and take their existing equity release plan to the new property, meaning they won't need to pay off the loan when they move. However, the new property must be of the same or higher value to do this, which can cause a problem if you want to downsize to a property of lesser value.
Well, the good news is that if you are a joint owner but not married, you can still apply for Equity Release. And when one party passes, the other has full rights to stay in the property until they pass. Things only become an issue and more complicated when two people live together and an application is made for Equity Release, but there is no joint ownership. The vast majority of Lenders will not lend in this situation. If there is only one person on the deeds, then the individual not on the deeds will need to sign a Waiver of Deeds. This means that if the party who has the Equity Release plan passes, the other party living in the property will have to leave the property. That means they are dealing with moving out in the most difficult of circumstances, so it is always best to seek advice.
It depends how long they have returned home for. If it is just for a couple of weeks or short term, that is usually fine, but if they are going to live there on a full-time basis, then they will have to sign a Waiver of Rights to the property in favour of the Lender, meaning they will have to leave should their parents pass.
As most people know, mortgages are tied to the Bank of England base rate. This means as the base rate increases, so does your variable rate mortgage, and the new fixed rate mortgage deals on the market. With Equity Release products, the interest rate is tied into government gilts. But what are Gilts? Well, these are government borrowings when it wants to raise money. Government gilt prices rise and fall independently of Bank of England Interest rates, so this doesn't mean rates will rise just because conventional mortgages have.
It is important to point out that a what is referred to as a Buy to Let Equity Release is not an Equity Release product, rather, it is a conventional Mortgage product - they are completely different. As we know Equity release refers to lifetime mortgages that are designed for applicants over 55 for retirement purposes. So if you wanted to take out a Lifetime Mortgage against your Buy to Let property, this is a different proposition. There was recently a lender who would allow you to use a Buy to Let property for the purposes of Equity Release, however, they have recently withdrawn from the market, so it is not currently possible. We are hoping they may offer it again at some point.
Equity release is not currently available for second homes with our lenders. We do not know when this restriction might be lifted. However, we hope that it could be offered again in the future.
Attendance Allowance helps with extra costs if you have a disability severe enough that you need someone to help look after you. It's what's known as a non-means tested benefit. Some State Benefits can be affected if you take out an Equity Release plan and could reduce your income. But the good news is that non-means tested benefits are not affected when you take out an Equity Release. Other types of non means tested benefits include Disability Living Allowance, Carers Allowance and of course your State Pension.
It all depends on who's names are on the deeds. If both parties are on the deeds, and on the loan, the second party can stay in the property until their passing. If however the second party wasn't on the deeds and they were not party to the Equity Release Plan, they would have previously been asked to sign a Waiver of Rights and then unfortunately, then they will have to leave the property. They have no legal right to remain.
If you take out Equity Release, it cannot automatically be assumed that there will be enough money left in your estate for you to leave an inheritance. If you want to ensure your children receive a guaranteed amount on your death, Inheritance protection is a form of guarantee offered with equity release plans which means you can ensure you leave an inheritance for your loved ones after you pass away .If you choose to protect a portion of your home's value as inheritance - let's say 30% - the maximum amount your provider will allow you to release will also be reduced by 30%. The larger the proportion protected, the lower the amount available to you as equity release. Essentially, all they do is is to reduce the value of your home by the amount you want to guarantee you children or family to inherit. Do be aware however that this will in all probability attract a higher rate of interest.
So, the really great news is that Products which fully meet the Equity Release Council's Product Standards are required to feature a “no negative equity guarantee”. Put simply, this guarantee means that you, or more specifically, your estate will never owe more than the property is worth when it is sold. Under your equity release plan, you have the right to live in your home until you need to move into a smaller property (whereby the plan may be transferrable), or move into permanent care, or until death. Your property will be sold and the sale proceeds will be used to repay the money owed to the provider of your plan. Any money left over, at the end of your plan, will be paid to you or your beneficiaries, in accordance with your Will. However, in the unlikely event that the value of your house has decreased significantly, it is possible that it might not be worth enough to cover the amount which you owe. In reality, this is only likely to be the price if there is a serious house price crash. The “no negative equity guarantee” means that if this turns out to be the case, the remainder of the loan would be written off.
Broadly speaking, Equity Release can be used for pretty much any purpose. The most common of these tend to be paying off an Interest only mortgage, providing funds to children for a deposit on a property, home improvements and even paying off debt. But the one thing you should never use Equity Release for is Investment purposes. This is because the amount that you earn from the investment is likely to be less than the interest accrued on your loan. Equity Release lenders do not allow you to directly invest funds into stocks and shares. Any restrictions in place are designed to protect the lender and the client.
So, there may come a time when you may not have mental or physical capacity to make decisions for yourself. However, you can appoint someone you trust to take decision on your behalf should the need arise, for example to release equity from your home. For this reason, it's important to make your wishes clear in a legal document, called Lasting Power of Attorney. So, in fact your children if they had LPA can assist you with taking out an Equity Release product. However, the lender will need to see the original documents and the application will be taken more slowly, to ensure, the lenders, the solicitor and the client are going to be happy with the way that the case progresses and that everything is in order. Also, whilst it is not a legal requirement to set up an LPA when releasing equity, it is recommended by the Equity Release Council that people entering into a Lifetime Mortgage plan with a drawdown facility should have an LPA in place should they suffer from ill-health or a lack of mental capacity.
The lender is not looking for you to make any compulsory or contractual payments. You can literally take out a plan and make no repayments ever! However, should decide you would like to try and reduce the loan, you have the choice of whether to reduce the capital or interest of your lifetime mortgage, or both. Again, this is voluntary, so you decide how much you want to pay and when you want to pay it. You can make a monthly payment of up to 10% on the loan to include your interest. Essentially it becomes a repayment mortgage without a fixed term. Or if you want to just keep the loan amount the same, you can just pay the interest each month, which in effect becomes an interest only mortgage without a fixed term.
If you can afford to pay the interest each month, then this would be a great option as your loan amount would not increase, meaning there is more left for your beneficiaries when you pass! Simple
There are several lenders who will look at a person's health record, and if they are deemed to be impaired, taking medication or have an illness, then you can actually get a better offer from the Lender! So, you might actually be able to borrow more than if you were in perfect health. The lender may well want a doctor's report to clarify the details and so you will need to sign a Letter of Authority for that to happen. But why can you borrow more if your health isn't good? Very simply this is because usually because people's life expectancy may well be shorter because of poor health. This means the Lender get a return on their investment quicker. Harsh, but true!
Well, with a conventional Mortgage, Lenders will often need to know how you're funding or planning to fund your retirement. That will help them make sure you can afford your mortgage payments. You might have to share your pension statements or proof of any other income sources, like investments or property rentals. And so that is the reason many people over the age of 55 consider a Lifetime Mortgage - because they are designed specifically for people who are near or in retirement. If you're near retirement or already retired, later life mortgages are an alternative to a standard mortgage that might be right for you. Unlike a standard mortgage, a later life mortgage will usually be paid off by the sale of your home after you die or move into full-time care. So, the size of your pension pot or the amount of retirement income you'll get is less of an issue when you apply for one.
As part of an Equity Release application, the lender will perform a credit check on each applicant. An adverse credit score is unlikely to impact on your eligibility for equity release. Equity release lenders do check your credit report, but it is not the most important factor. Certain debts, however will need to be repaid and these include, Mortgages, Secured Loans, Outstanding County Court Judgements (CCJ's) and Individual Voluntary Arrangements (IVA's), Debts which will not usually need to be repaid include Unsecured Loans, Credit Card Balances or Overdrafts. Your advisor will be able to guide you to the best lenders who can help your individual circumstances depending on your credit history.
For every equity release plan available, you will need to be discharged from bankruptcy, what is known as a Discharged Bankrupt. This releases you from any debts, and restrictions covered by your bankruptcy. If you are not yet discharged, no lender will provide you with an equity release plan. Usually, after a year of being bankrupt, you will usually be automatically discharged from bankruptcy, but this is not the end of it as your bankruptcy will stay on your credit file for six years. Regardless of when your bankruptcy took place, you will need to declare it to your advisor and the equity release lender. Providing you are discharged from bankruptcy; your eligibility will not be impacted.
Independent legal advice is a requirement of the equity release process. Having an equity release solicitor ensures that you have had not just financial, but also legal advice on the implications of taking out equity release. Remember your solicitor works for you. No advisor, lender, or another party can force you to use any particular solicitor. It is your free choice which solicitor you use. But Equity Release is quite specialised, and a Solicitor has to be on a Lender Approved Panel, and therefore you will normally find the loan will go through quicker if you find an Equity Release Solicitor. They also tend to have fixed fees for the work they do, and this will usually be deducted from the loan, and that includes a visit from a suitably qualified Solicitor to ensure you understand fully what you are doing and they will witness your signature on the Mortgage Deed and ensure they are satisfied that you know exactly what you are doing.
No, in fact they will come to you as part of the service, whereupon they will also deal with any outstanding ID, ensure you are fully aware of and understand the agreement you are entering into. They will also witness your signature on the Deeds, all in the comfort of your own home.
There are not usually any upfront costs when taking out Equity Release, but there are certainly costs involved. The first one is the Broker Fee, and most brokers will only take this on completion. It is possible some brokers will ask for an upfront fee, but be very careful if they do, because if for any reason your case does not progress to conclusion, you could be out of pocket. The second cost is the Solicitor Fee, but this is also paid on completion. Some Lenders will also charge a Lender Fee, although this does not apply in all cases with all lenders - but again, this is taken on completion. And the final one is the valuation fee, which again is deducted on completion. So whilst there are usually no up-front costs, there are cost to take into account and consider when looking at how much money you actually need.
Very simply, you would not have to pay a penny. That is of course assuming your Broker does not charge fees up front - something we would not recommend. If however, valuation had taken place or the Solicitors had carried out work, then you
There are a number of plans available whereby you can take your loans with you if you move. This means you have the freedom to sell your house and transfer the debt to your new one, providing it meets the lender's criteria. If the new property is worth less than your old one, then you may still be able to move and take your plan with you - providing you repay some of the equity release debt. By choosing a plan with downsizing protection, you can pay off the outstanding debt before the end of its term without paying an early repayment charge. So if, for whatever reason, you want or need to move into another home that isn't acceptable to the lender, typically after five years of taking out a lifetime mortgage, you can pay the loan back early without incurring an early repayment charge. Without downsizing protection you may still be able to move, however, it's important to note you may incur an early repayment charge if you choose to repay your loan early. Also, bear in mind there will also likely be costs involved such as valuation fees and lenders fees.
A Whole of Market mortgage broker is able to offer a much wider range of products, representative of the entire market, as opposed to mortgage advisers that are tied to a specific lender or a limited list of lenders.
The Right Mortgage and Protection Network is a prominent network of independent financial advisers in the UK, providing expert guidance and support across various financial services, such as mortgages, insurance, and later life planning. s members of The Right Mortgage and Protection Network, we at My Later Life Planning leverage their extensive resources, industry expertise, and commitment to high standards to ensure our clients receive the best possible advice and personalized solutions for their needs. The Right Mortgage and Protection Network's focus on compliance and professional development enables us to offer exceptional service and peace of mind to our clients.
Deciding between Equity Release and Home Reversion Plans comes down to your individual needs and what you envision for your future. Equity Release lets you unlock some of your home's value, typically through a lifetime mortgage, while you continue to own and live in your property. The loan, plus interest, is repaid when your home is eventually sold—usually after you pass away or move into long-term care.
Home Reversion Plans, on the other hand, involve selling a portion or all of your home to a provider in exchange for a lump sum or regular payments. You can stay in your home without paying rent, but you'll no longer own the full property. The provider gets their share when the property is sold.
If keeping ownership and leaving an inheritance is important to you, Equity Release might be the way to go and of course MY-Later life can help you with this option. But if you're looking for a bigger payout now and are okay with selling part of your home, a Home Reversion Plan could be a better fit. It's a good idea to talk to a financial advisor to help you choose the option that best matches your goals.
Yes, you can still pursue equity release even if you have an existing mortgage. The key is that the remaining balance on your mortgage will need to be paid off using the money you release from your property. Once that's taken care of, any leftover funds from the equity release are yours to use however you like. It's a good idea to consult with a financial advisor to make sure this option is the right fit for your situation.
We know you might have questions, and we’re here to help! On this page you’ll find answers to some of the most commonly asked questions about our equity release services.
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