Equity Release - Lifetime mortgages
A lifetime mortgage is a form of equity release that allows those aged 55 and over to release the equity from their home via a secured long-term loan.
Unlike with a home reversion plan, you will still own 100% of your property until you pass away or permanently vacate the property by, say, moving into long-term care.
You will not be required to make any payments during the lifetime of the loan, but the amount borrowed and the interest earned will be paid off by selling the property once you die or leave it permanently.
Although you stand to benefit from any future increase in value, because you still own the whole property, the downside is the longer you live, the bigger the loan will get, meaning your loved ones are likely to get a smaller share of any inheritance left for them.
In addition to affecting your tax position and eligibility of means-tested benefits, this loan could also leave you with a bill in the form of early repayment charges should you want to clear it. You also cannot raise as much cash compared with a home reversion plan.
