A lifetime mortgage otherwise known as an Equity Release Mortgage or Equity Release Scheme is just one of the equity release options available, and tends to be the most popular by far. However, there are other options available such as Home Reversion Plans, and so advice from an equity release advisor is essential to ensure you reach the right decision.
Lifetime mortgages are the most common type of equity release scheme available, and work in a simple manner to allow you to borrow money against the value of your home without there being any ongoing monthly payment required. They are generally arranged on a fixed rate basis so that you are able to determine exactly how much interest is charged and added to the loan. Because no monthly payments are made the interest rolls up against the original loan at the fixed rate of interest. Interest is generally charged annually, but you should check with your adviser, as some lenders advertise their monthly interest rates, which after monthly compounding will give a higher annual rate.
Interest will continue to be charged to the increasing balance for as long as the loan remains in place. Repayment of the loan is made when the property is sold, with a move into long term care, or upon death of the last applicant.
Whilst Lifetime Mortgages are a reasonably simple product, it is always recommended that you take advantage of your FREE equity release lifetime mortgages consultation. Your adviser will then be able to take note of all the details applicable to your situation and requirements, so that you can be provided with the details of the best schemes available.
Costs of a Lifetime Mortgage
Should you decide to proceed with a mortgage application, your home will be valued and surveyed by the provider. This will determine how much your home is worth and exactly how much can be released. The cost of the valuation is down to you, although, through our partnership with Key Retirement Solutions, you will often have access to beneficial products that on occasion provide a free valuation and or no lender arrangement fee.
Valuation fees
Where a valuation fee is payable, the amount will be dependent on the value of your property. As a rough guide, with a property value of £100,000 you would expect to pay between £200 and £300
Other costs will depend on the type of plan you choose and the amount of equity you wish to release.
Lender Fees - which include arrangement, completion and application fees
These cover administration costs and are typically between £300 and £700.
Solicitors' fees
These can range widely between solicitors, and tend to be slightly cheaper with firms that specialize in Equity Release. A typical charge for a Equity Release Mortgage would be between £400 and £600.
Insurance
The lender will require that you keep a suitable buildings insurance policy in place for the duration of the lifetime mortgage. The cost will be dependent on the type of property you own, its size and the error you live in.