Later life Planning

Retirement can be an exciting time, full of new opportunities and experiences. However, it can also be a time of financial uncertainty, particularly if you have not saved enough for your retirement. That's where equity release can come in.

Lifetime mortgages allow you to release the equity in your home without having to sell it. You can choose to take out a lump sum, receive regular payments, or a combination of both. The money released can be used to supplement your retirement income, pay off debts, or make home improvements.

Below is a brief overview of the various types of Later Life mortgage products currently available.

Lifetime Mortgages: An Overview of Types Available in the UK
A lifetime mortgage is a type of mortgage available in the UK that allows homeowners aged 55 or older to access the equity tied up in their property without having to sell it. This form of borrowing is becoming increasingly popular among the older generation who wish to supplement their retirement income or finance specific expenses. In the UK, there are several types of lifetime mortgages available, each offering its own unique features and benefits. Below, we outline some of the most common forms:
1. Roll-up Lifetime Mortgage: Also known as a standard lifetime mortgage, this is the most straightforward type available. With a roll-up lifetime mortgage, borrowers receive a lump sum or regular instalments which are not required to be repaid until they pass away, move into long-term care, or the property is sold. During the loan term, interest compounds and is added to the overall debt, gradually increasing the balance over time.
2. Interest-Only Lifetime Mortgage: In an interest-only lifetime mortgage, the borrower has the option to pay off the interest charged each month, preventing it from rolling up and accumulating over time. By making regular interest payments, borrowers can control the amount of debt that builds up, thus reducing the overall impact on their estate. This type of lifetime mortgage provides additional flexibility for those who wish to manage the interest accrued.
3. Enhanced Lifetime Mortgage: This type of lifetime mortgage is specifically designed for individuals with health conditions or lifestyle factors that may shorten their life expectancy. Lenders offering enhanced lifetime mortgages take these factors into account and provide higher lump sum payments or loan-to-value ratios compared to standard mortgages. This allows borrowers with medical conditions to access a larger percentage of their property's value, providing significant financial relief.
4. Drawdown Lifetime Mortgage: A drawdown lifetime mortgage allows borrowers to access their money in smaller amounts over time, as and when required. Rather than receiving a lump sum, borrowers establish a pre-approved limit or reserve on their mortgage, from which they can draw funds in stages. Interest is only charged on the withdrawn amount, rather than the entire loan balance, resulting in potential cost savings. This option offers greater flexibility and control over funds, ensuring that borrowers only pay interest on the funds they actually utilize.
5. Interest-Serviced Lifetime Mortgage: This type of lifetime mortgage requires the borrower to make monthly interest payments, similar to a traditional mortgage. By meeting these payments, the overall debt does not increase, providing peace of mind to those who wish to minimize the financial impact on their estate. An interest-serviced lifetime mortgage can be ideal for individuals with a stable income or reliable pension payments.

It is essential to note that lifetime mortgages are regulated by the Financial Conduct Authority (FCA), aiming to protect borrowers and ensure responsible lending. Before considering a lifetime mortgage, it is advisable to seek independent financial advice to explore the options, understand the implications, and determine the most suitable type of mortgage based on individual circumstances.

As with any financial decision, it is crucial to carefully consider the terms, costs, and long-term impact before committing to a lifetime mortgage.

Please note that Equity Release is not suitable for everyone, and it's important to seek independent financial advice before making any decisions. A qualified Lifetime Mortgage adviser can help you understand the risks and benefits of equity release and help you choose the best product for your individual circumstances.

At Total Mortgages, we offer retirement planning services that include Lifetime mortgage options. Our qualified adviser can guide you through the process, from initial consultation to application and completion. We work with a range of Lifetime Mortgage providers, ensuring that we can find the most suitable product for your needs.

If you are approaching retirement and are considering a Lifetime Mortgage as a way to supplement your income, contact us today to arrange a consultation with our qualified adviser. We will help you understand the process and guide you through every step of the way.