Lump Sum Lifetime Mortgages
A lifetime mortgage is a lump-sum loan, where the interest payable is 'rolled up' over the full term. There are no payments for the rest of your life, but interest is compounded year on year until your death (or move into a residential care home). For most lump-sum deals, interest rates are fixed at the outset.
How much can I borrow with a lump sum plan?
How much you can borrow with a lump sum lifetime mortgage depends on the following three things;
- homeowners over the ages of 55.
- A percentage of the value of your home.
- Where you live.
A mortgage calculator will help you determine how much you can borrow.
Advantages of lump sum equity release plans.
- You can borrow a huge amount of money on one go, once-off amount.
- The money you release is tax-free and yours to spend as you wish.
- Interest rates are competitive and fixed for life.
- You can still keep your home and live in it.
- Monthly repayments are optional.
- Available for freehold and leasehold properties.
- Plans are portable. If you want to move in the future, you can take your plan with you.
- Interest accrued and the amount borrowed is repaid when your plan ends, that is when the last homeowner dies or moves into long term care.
- You can make overpayments of up to 10% of the amount borrowed each year without charge
- Flexible features are available
Disadvantages of lump sum equity release plans.
- The built-up compound interest that has built up over time and the amount that was borrowed should be repaid when the homeowner dies or moves into someone else's care for a long period.
- An inheritance that you plan to leave behind for your loved ones may be affected.
- Claiming any means-tested benefits may make you ineligible for a lump sum. If you want a claim, a drawdown mortgage could be a better option for you.
Visit SmartmortgagesUK for more info.