Most lifetime mortgage providers now offer a flexible option that allows regular and voluntary repayments of principal (up to 10% annually of the original amount borrowed) or interest over the life of the mortgage. You can pay for the capital release or interest over the life of the mortgage ahead of time. However, depending on the lender and the type of lifetime mortgage you have, early repayment fees may apply. Some equity release providers allow you to make early repayments of either the capital release or interest over the life of the mortgage after a fixed number of years.
Others allow you to repay a percentage of the loan each year. If you pay a lifetime mortgage early, you may have to pay an early repayment fee. These fees can be quite expensive, but before you sign up for your plan, you will have been given information about the maximum you may have to pay if you decide to repay part or all of your loan ahead of time. Once you have taken out a lifetime mortgage, the loan will accrue interest.
Some lenders allow you to pay interest each month, but many people decide to let the interest accrue. In addition, all lifetime mortgages approved by the capital release council require that the lender cannot request early repayment of the money under any circumstances. It is essential that you discuss with your advisor your repayment plans with your capital release before hiring any capital release plan. Early repayment fees do not apply if you have a joint lifetime mortgage and you pay within three years of the date one of you died or the date you notified us that one of you needs long-term care.
This idea really shatters the idea that life mortgages should only be considered for those looking to borrow large amounts of money for the rest of their lives. You can use the proceeds from the sale of your property to pay your equity release in full when you move to a new home. Before you commit to taking out a life mortgage, you will be given an “illustration of life mortgage”. But don't worry, your Equity Release Supermarket advisor is the expert when it comes to early repayment charges.
Re-mortgaging with your current lender can be easier and faster than changing mortgage providers, and many homeowners do. But before you consider using a lifetime mortgage to take out short-term loans, it's vital that you discuss this with your Equity Release Supermarket advisor to find out if this is the best solution for you. The specific gilt associated with your lifetime mortgage is chosen to reflect the expected term. Find out the maximum you can borrow with an interest-only retirement mortgage (RIO), a residential, income-based mortgage that allows you to borrow indefinitely until retirement.
It is important to emphasize that capital release mortgages and remortgages to free up capital are not the same thing. While you're not looking to pay a lifetime mortgage early in this situation, you're free to move home without penalty. Most lifetime mortgages have a non-negative equity guarantee, and this always happens if the provider is a member of the Equity Release Council.
