A modern approach to Equity Release.
Unlock some of your property’s value, as a tax-free lump sum or additional income, while retaining ownership of your property.
We are both Independent Financial Advisers and Mortgage Brokers and are always happy to chat and see if a Lifetime Mortgage or Equity Release is right for you.
A lifetime mortgage is a type of equity release where a loan is secured against your home. The loan does not need to be repaid until you die or go into long-term care. If there are 2 of you, then it is when the last one dies or goes into long term care.
You don’t need to make any payments but can choose to do so if you wish. The cash from a lifetime mortgage can be taken as a lump sum or drawn down gradually and is tax free.
It frees up some of the wealth you have tied up in your home and you can still continue to live there for as long as you would like and retain full ownership of your home. The money can be used for almost anything you wish.
Equity release refers to a way of getting at the cash value of the equity in your home. Releasing this equity into cash so you can use and enjoy it now.
A lifetime mortgage (sometimes called an equity release mortgage) is a type of equity release. At the moment it is the most popular type of equity release and has largely replaced the original type of equity release, called a Home Reversion Plan. Unlike a Home Reversion Plan (where you effectively sell your home in advance and live there as tenants) a lifetime mortgage allows you to retain ownership of your property, along with lots of other benefits that give you a lot more control and flexibility (such as being able to move home, repay the mortgage if needed, using inheritance protection and many more features).
Lifetime mortgages are available to anyone over the age of 55 who owns their own property in the UK. If there are 2 applicant then the youngest must be at least 55. Your home must be worth at least £70,000 and you must be resident within the UK for at least six months of the year. Security for the mortgage will only be taken against your main residence.
The amount of money you can release from your house is measured by the value of your home and how old you are (sometimes health is also assessed). This is because the Lifetime Mortgage providers need to work out and make an estimate of how you will pay them and after how long. The older you are, the more money you can get.
This is different from a standard mortgage where your income is assessed in determining how much you can afford.
You can generally borrow around 20% to 60% of the value of your home with a lifetime mortgage. With equity release plans available to people from 55 and over, you will typically be eligible to borrow a smaller amount if you are closer to 55 with the amount (as a percentage of the property value) rising as you get older.
Please note that the amounts that you can get from a Lifetime Mortgage or Home Reversion scheme differ.
Most Lifetime Mortgages have an interest rate that is fixed for life, and although there are variable rate options, most people do choose fixed rates. The big advantage is that you can see exactly how the sum you owe changes over time and you are protected from potential rate rises.
Variable rate plans may offer an initial lower rate but rise over time. With lifetime mortgages from lenders approved by the Equity Release Council however, any product with a variable interest rate will have an upper rate limit that it can’t go above.
Using programmes such as Skype, Zoom and Teams can be a quick and easy way to discuss Equity Release.
Our preferred way of giving Equity Release advice. Face to face advice delivered in the comfort of your own home on a day and time that suits you.
We are always happy to discuss Equity Release, feel free to give us a ring to discuss anything you like.
With equity release, there is no need to make any monthly repayments.
A lifetime mortgage (the most popular form of equity release), is a loan secured against your home. You can choose to make payments, and the remaining interest is rolled up and is repaid with the capital borrowed at the end. That’s usually when the last remaining applicant either passes away or enters long-term care.
A “no negative equity guarantee” means that you or your estate will never owe more than the property is worth when it is sold.
With your Lifetime Mortgage plan, you have the right to stay in your home until you need to move into a smaller property, move into permanent care, or upon death. When this happens your property will be sold and the proceeds from the sale will be used to repay the Lifetime Mortgage with the remaining proceeds paid to your beneficiaries, in accordance with your will.
In the unlikely event that your house has decreased significantly in value then there may not be enough to cover the outstanding equity release amount. If this were to happen then the "no negative equity guarantee" would mean that the remainder of the loan would be written off, and there would be no more to pay. This helps ensure that the rest of your estate is not impacted by your equity release.
Lifetime Mortgages can come with Inheritance protection. This is a type of guarantee which means you can make sure you leave an inheritance from your home for your loved ones after you pass away.
An inheritance protection guarantee works by essentially allowing you to ring fence a portion of your home’s value. When it becomes time for the property to be sold, then the proceeds from the ring-fenced part will be completely free to be passed on as inheritance.
The amount protected will be a percentage of the property value. This means if the house value increased over time then the Inheritance Protected part will also increase.
A common misconception about equity release is that you won’t be able to move home once you’ve unlocked your tax-free cash from it. In fact, with a Lifetime Mortgage, you can, subject to certain criteria. Although when you take out your Lifetime/Equity Release Mortgage you may have no plans to move or downsize, we we never know what’s around the corner. As we are a member of the Equity Release Council, the ERC standards will guarantee you the right to move your plan to a new property. This means you have the freedom to sell your house and transfer the debt to your new one, providing it meets the lender’s criteria. If the new property is worth less than your old one, then you may still be able to move and take your plan with you - providing you repay some of the equity release debt.
There are different types of lifetime mortgages. Lifetime mortgages are usually categorised according to how the equity that you release will be released (lump sum, drawdown etc) and repaid (rolled up, or part/full interest repayment).
As the name suggests, this type of lifetime mortgage will pay you a lump sum. You can use the money for whatever purpose you wish – for example, to cover medical or care expenses, home improvements or to pay off debt. Typically, interest on a lump sum lifetime mortgage will roll up to be paid off with your loan when you die or move into care and your home is sold. This can also be combined with a drawdown version, allowing you more flexibility.
A drawdown lifetime mortgage works just like the lump sum version, but it provides the homeowner with a drawdown facility to access their loan rather than giving them a lump sum. This means they can take parts of their loan in stages, and usually only pay interest on the amount they have actually taken, which could save money on interest. This can also be combined with a lump sum version, allowing you more flexibility.
A voluntary repayment lifetime mortgage – also known as a flexible lifetime mortgage – allows the homeowner to make voluntary repayments on the interest each month. This can be all of the interest or a percentage of it. The reason you might decide to do this is to stop the debt from escalating into a much greater debt, and thus ensure your loved ones receive more money from your estate once you pass away.
It is the same as a standard lifetime mortgage secured against your home, but it is aimed at people with poor health and terminal illnesses.
If your life expectancy is reduced or the time expected before requiring residential care is short, the lender will offer to lend you more of your equity than a standard lifetime mortgage offers. This could be used to pay for private healthcare to improve the quality of later life.
As part of the application, the homeowner must complete a health and lifestyle questionnaire and possibly supply the lender with a doctor’s report. They will not usually be asked to complete a medical.
This allows the interest to be rolled up and added to the loan, so you make no monthly or annual payments.
A lifetime mortgage can be a great way to release equity from your home.
The main advantage is clear – it allows you to release cash that you can spend now, rather than leaving it tied up in your property. Many UK homeowners are “asset rich & cash poor”, living in valuable properties but without the cash in their pocket to enjoy life as they would like. A lifetime mortgage can be used to turn this equity into cash to enjoy it now, is tax free and can be used for almost anything.
However, there are quite a few things to consider with a Lifetime Mortgage to make sure you not only get the best deal and the right one for you, but that you understand any risks and if there are any more suitable alternatives.
We are Bristol Independent Financial Advisers and Mortgage Brokers and are always happy to discuss Lifetime/Equity Release Mortgages or anything financial. Please get in touch if you have any questions you would like us to help with.
We answer some of our most commonly asked questions below. But if you would like to know more then please get in touch and we will be happy to answer any query you may have on Lifetime Mortgages or Equity Release.
Yes, you can sell your house if you have a lifetime mortgage.
Like all equity release schemes, a lifetime mortgage is typically repaid with the sale of the property when the homeowners enter long-term care or pass away. However, you can sell the house and use the funds released to repay the lifetime mortgage. Alternatively you can move to a different property, as long as it still meets the lendets criteria.
It is possible to select a Lifetime mortgage where you make payments each month. You can choose the amount, from nothing up to the full monthly interest payment.
Yes, a lifetime mortgage can be repaid at any point and by any means.
Although a lifetime mortgage is typically repaid with the sale of the property when the homeowners enter long-term care or pass away, if you suddenly inherit a cash lump sum or sell an asset or win the lottery, you can repay the loan amount, plus the interest charges and end the equity release agreement. Be aware though that an early repayment charge may apply and these can be substantial.
Like with a standard Residential Mortgage, with a Lifetime Mortgage you will be required to keep the property in a good state of repair and have buildings insurance in place.
All equity release lenders will require that you have buildings insurance in place. The sum insured needs to sufficiently cover loss or damage by fire and all normal risks associated with a residential property. You also need to confirm that you will maintain buildings insurance until the end of the equity release plan. You will not have to take out home insurance with your equity release lender or with your broker, if you have used one.
You must also agree to maintain the property in a good state of repair. The mortgage is secured against the property value, and the lender will want to make sure it is retains it’s value.
*You are now leaving the website of Leaf Financial Advisers and we cannot be held responsible for the content of this external website.
Leaf Financial Advisers Ltd is entered on the FCA register under reference 944216.
Leaf Financial Advisers Ltd is registered in England and Wales, Company number 12950412. Registered office: 39 Cromwell Road, Bristol, BS6 5HD.
Leaf Financial Advisers Ltd. is an appointed representative of Julian Harris Financial Consultants, which is authorised and regulated by the Financial Conduct Authority, FCA number 153566.
The performance of your investments is subject to risk(s). Its performance may fluctuate based on movements in the market and economic condition(s). Capital at risk. Currency movements may also affect the value of investments. You may get back less than you originally invested. Past performance is not a reliable indicator of future performance.
Tax treatment is based on an individual’s unique circumstances.
Think carefully before securing debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it. Please note that some mortgages such as commercial BTLs are not regulated by the FCA. Equity release may involve a lifetime mortgage or a home reversion plan. To understand the features and risks, ask for a personalised illustration. Equity release may impact the size of your estate and it could affect your entitlement to current and future means-tested benefits.
The Financial Ombudsman Service (FOS) is an agency for arbitrating on unresolved complaints between regulated firms and their clients. Full details of the FOS can be found on its website at www.financial-ombudsman.org.uk.
Leaf Financial Advisers
39 Cromwell Road,
St Andrews,
Bristol,
BS6 5HD
Open from