Lifetime mortgage equity release plan
This is where you release a lump sum of equity from the value of your property. The amount you release is tax free, and can be spent on anything you choose. There are no regular repayments to make as the amount that you have released, plus any interest accrued, is repaid from the proceeds of property once it is sold. Generally, this is when you pass away or permanently vacate the property e.g. move into long-term care.
Advantages of Lifetime Mortgages
Plans available from the age of 55
The cash you release is tax free and can be spent on whatever you like
You continue to own 100% of your home, thereby benefiting fully from any future increase in its value
There are no repayments to make with a lifetime mortgage
The 'no negative equity' guarantee ensures that you can never pass on debt to your estate
Plans are available that allow you to guarantee an inheritance for your family
Disadvantages of a Lifetime Mortgage
The size of the mortgage will grow over time
Your tax position and eligibility of means-tested benefits may be affected, as might your options for moving or selling your home in the future
The amount that you will leave as an inheritance is likely to be reduced
If you wish to pay off the equity release plan early, you may have to pay an early repayment charge - these differ from plan to plan.
You can't usually raise as much with a lifetime mortgage as you could with a reversion plan