Lifetime mortgages and equity release

Lifetime mortgages for the over 55s are becoming a common form of equity release.

A lifetime mortgage is a loan secured against your home. It allows you to retain ownership of your property for the duration of your lifetime, or until you move into full time care. It also allows you to release tax-free cash. This can be of particular benefit to those who own a valuable property but need to release equity.

Key aspects of lifetime mortgages

• A lifetime mortgage is generally available to those over 55. However, some products are now coming to the market for the over 50s.
• The property against which the loan is secured must be your main home.
• The rate of interest is fixed for the duration of the mortgage.
• Equity release – you can release tax free cash.
• With a lifetime mortgage you remain in your home with no need to move out.
• The mortgage lasts for the duration of your lifetime or until you move into long term care.
• At the point you die or move into care, the property is usually sold so that the money raised from the sale can pay off the loan.
• Lenders will usually offer a no negative equity protection. This means the estate will not need to pay back more than the value of the loan.

Be aware that interest continues to accrue on the amount that is owed for the duration of the loan. So, this means the debt can grow quite rapidly. It may therefore impact on your inheritance wishes.

Bird & Lovibond’s specialist property team can advise on the legal requirements and implications of lifetime mortgages and other equity release products.