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Lifetime
Mortgages
You
can borrow a % of your property value, dependent on your age and with
a lifetime mortgage, you retain ownership of your property. You are not
required to make payments to the lender and the interest that is charged
is added to the loan.
The original loan together with the accrued interest would be repaid on
the sale of the property, the borrower going into long term care or the
death of the borrower.
Key advantages:
- You retain ownership
of your property
- Cash raised can
be used as you wish
- No monthly payments
- You are guaranteed
lifetime occupancy
- Any remaining
equity in the property when the property is sold is available to you
or your beneficiaries
Key Disadvantages:
- You can only raise
a relatively low proportion of your property value
- The debt could
roll up quickly and erode your equity
- You have no control
over the roll up of interest
- Moving home may
be difficult
- Increases in
capital or income may affect your rights to state benefits
Home
Reversion Plans
With a home reversion
plan, you sell part or all of your property to a home reversion provider
in exchange for a cash lump sum or an income. Your interest is protected
by the formation of a lifetime lease, which will guarantee you occupancy
of your home for life. When you die or go into long term care, the provider
sells the property.
Key advantages:
- Cash
raised can be used as you wish
- No
monthly payments are required
- You
are guaranteed lifetime occupancy
- On
a part reversion scheme, some equity in the property will be retained,
which would be available to you or your beneficiaries
- The future position
is certain as there is no rolled up interest.
Key Disadvantages:
- You would lose
ownership of all or part of your property
-
You lose
the right to any future growth in the part of the property sold.
-
The cash
or income raised will not represent the true value of the part of the
property sold
- If you die soon
after taking out this arrangement, the deal would have been very expensive
-
Moving home
may be difficult
- Increases in
capital or income may affect your rights to state benefits
Safe
Home Income Plans (SHIP)
Safe
Home Income Plans (SHIP) was launched in 1991 to promote safe equity release
schemes & protect customers.
Member
Companies offer important guarantees, such as:
- A
guarantee that you can live in your home for as long as you wish.
- A
“NO NEGATIVE EQUITY” guarantee, ensuring that you will never
owe any more than the value of your property.
-
The freedom to MOVE home to another suitable property.
-
Fair, Simple & Complete presentation of their plans.
-
Independent legal advice from your own choice of solicitors.
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