Lifetime mortgages

Retirement is an important stage in your life. At Aspire Financial Service we understand that you will want to be financially secure in order to enjoy this time and the plans you have made.

One way of making your retirement more enjoyable could be to release equity from your home, this way you will have increased finances available to support your lifestyle. Equity release is available for homeowners who are over 55.

Put simply, a lifetime mortgage is a long-term loan secured against your property which enables you to release a tax-free lump sum from the equity you have built up within the property. The funds released through a lifetime mortgage can be used for any purpose or you could use this route to purchase a retirement property.

Lifetime mortgages are available to homeowners aged between 55-95 providing your property has a value over XXX??? Lifetime mortgages are different to home reversion plans as you retain full ownership of your home.

There are a number of different lifetime mortgage products to consider:

When talking out a standard lifetime mortgage you can draw between 13-55% of the value of your home but it will depend on your age. Compound interest is charged (typically at a fixed rate) throughout the term of the plan but this is rolled-up so you won’t need to make any repayments. The loan, along with interest accrued, are repaid when your property is sold, when you move home, when you and your partner both pass away, or when you move in to long-term care.

When the property gets sold, the loan gets repaid, any remaining funds go to your beneficiaries.

If you do not need the full funds immediately, a draw down plan could be the most suitable option.

Drawdown lifetime mortgages work in much the same way as a standard plan. An initial percentage of your property value is agreed as a loan facility. You then “draw down” the money as and when you need it until this limit has been reached, but you are only charged interest on the amount that you have draw down.

If you or your partner make certain lifestyle choices or if either of you have health conditions, it may be possible to obtain a higher age-related loan as a percentage of the value of the property through an enhanced lifetime plan. This type of loan is available through some providers. Health issues such as diabetes, heart problems, or high blood pressure would be typical examples of health issues and smoking is an example of a lifestyle choice.

An Interest Payment lifetime mortgage provides some flexibility. You can choose to pay as much or as little of the interest payment due each month. As a result, the debt does not increase to the same degree as it would with a standard plan, you can therefore usually retain a larger residual amount to be left for your family once the loan has been repaid.

Combined plans

A combined plan would allow you to tailor the lifetime mortgage products to meet your specific needs, including combining different features from the different products available into one combined plan.

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