A lifetime mortgage is a type of equity release, a loan secured against your home that allows you to free up cash tax-free without having to move. 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. A lifetime mortgage is designed to last a lifetime, with interest accruing over time.
There is no obligation to make any monthly payments, but there are options to do so if you wish. Lifetime mortgages are the most popular form of equity release and may be worth considering if you're an older homeowner in need of a financial boost. However, due to the relative complexity of these products and the variety of factors involved, you cannot simply apply for a lifetime mortgage yourself. Whether you're looking to pay off an existing mortgage, make some home improvements, or give away money to a family member, a lifetime mortgage could help.
Therefore, you will be required to repay any existing mortgages on your property as part of the equity release. These figures are provided to illustrate the relationship between age and the amount of capital you can release from your home. If you have an outstanding mortgage on your residence when you sign up for a capital release plan, you will need to use part of the money to pay the existing balance. We have already explored how the maximum available capital release is based on the age of the youngest applicant.
Capital release products have improved significantly in recent years, in terms of product options, payment options and interest rates, so if you already have a capital release plan, it may be worth checking if you can find a better capital release agreement. Releasing capital allows homeowners to keep the use of their home while earning income or funds from it. If you are eligible, the amount of equity you can free up is usually between 20% and 60% of the value of your home. Lenders will also consider other factors when deciding how much capital you can release, including the type of property, its status, and its location.
If you live in a property that is not built of brick and stone and does not have a pitched roof of tiles, you may not be able to access all of the capital release plans and therefore you could receive a lower maximum amount of release. Other factors reduce the number of plans available, which could affect the maximum amount of release available to you.