When the last borrower dies or moves into long-term care, the house is sold and the money from the sale is used to repay the loan. Everything that is left goes to its beneficiaries. If your estate can pay the mortgage without having to sell the property, they can. When you die, your capital release plan pays off.
Your beneficiaries must inform their lender of equity release and, with a lifetime mortgage, they usually have 12 months after their death to repay their plan. This usually happens through the sale of your property; however, it can be by any financial means. Once your capital release plan has been repaid, the surplus money will be part of your inheritance. When you die or move to long-term care, your property will be sold and the proceeds from the sale will be used to repay the loan.
If any surplus funds remain, they will go to their beneficiaries, as stated in your will. With this equity release mortgage, you receive a cash sum with no monthly payments. The cash amount and interest are amortized by the sale of your home when you die or receive long-term care. There are two main types of equity release available: a lifetime mortgage and a home reversal plan.
However, it's worth keeping in mind that older borrowers often find it easier to apply for a lifetime mortgage rather than re-mortgage. If you want to pay off your lifetime mortgage ahead of time, perhaps because you want to sell your property or want to re-mortgage to take advantage of a cheaper offer, you will need to inform your lender. If you are using a lifetime mortgage (the most popular form of equity release), it will usually be repaid by selling the property. Please note that some lenders will not offer lifetime mortgages for homes that are listed as Grade I or II, those that have a thatched roof, or if the property is above or next to commercial premises.
The money you receive when you apply for a lifetime mortgage can be used for whatever you need it. Find out how much money you could borrow when you apply for a lifetime mortgage against your purchase-for-rent property. Lifetime mortgages (a type of equity release) and retirement interest-only mortgages are sometimes grouped as “later-life mortgage” or “later-life loan” products. This calculator helps you see how much equity you could free up with a lifetime mortgage, a loan secured against your home.
For lifetime mortgages that meet Equity Release Council standards, your equity will never owe more than the value of your properties. Once the fixed income term ends, monthly income will stop, but interest will continue to accrue until the lifetime mortgage is paid. 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. Whether it's a mortgage deposit for a son or grandchild, or an aid with a wedding or college fee, you can see them enjoy the money during their lifetime with an equity release mortgage.
If your pension, or your pension savings, doesn't provide you with enough to live comfortably in retirement, a lifetime mortgage could be a practical way to supplement your income. With a lifetime mortgage, there are no monthly payments, although it is available with certain plans. It is always best to check what this is before agreeing on a lifetime mortgage to avoid unpleasant surprises.