Life Time Mortgages
As the name suggests, these are mortgage type Equity Release schemes where you mortgage your property to release a cash lump sum. However, in this case, unlike normal mortgages you do not need to make any monthly repayments but can allow the interest to accumulate. Members of “SHIP” (Safe Home Income Plans) offer a no negative equity guarantee, which means that you will never owe more than the value of your home.
As with reversion type Equity Release schemes, these allow you to take a cash lump sum, but in this case ownership of the property remains yours. This type of Equity Release scheme is more popular than a reversion type Equity Release scheme as most people prefer the idea that they may be able to pass on some of the value of their house to their family when they die.
In general terms, homeowners can release between 15% and 50% of the value of their property dependent on their age and the Equity Release scheme. The older you are the more you are likely to be able to release money through an Equity Release scheme either as an initial lump sum or as a draw down where you can take smaller amounts as and when you need them. Drawdown type Equity Release lifetime mortgage schemes are particularly attractive as you only pay interest on the amount drawn down and thus the debt builds up at a slower rate than a traditional Lifetime Mortgage Equity Release scheme.
A number of Equity Release providers also give you the option to protect a proportion of your properties value so that you could pass on some of its value to your loved ones when you die. There is also the possibility to release a larger sum of money through your Equity Release scheme if you suffer or have suffered certain illnesses in the past. Not all Equity Release providers offer this option but it can be beneficial for those looking to raise the maximum amount possible.
If you live in the Manchester area and need equity release advice please call us.