Mortgage lenders are lengthening their terms so that remortgaging into your later years is becoming more commonplace. Each lender has its own rules with the important factor being able to prove you can afford the monthly repayments on the mortgage.
A RIO mortgage allows you to borrow money against your property, with the monthly repayments covering the interest only and not the loan itself. There is no set term, and the loan is repaid when your property is sold either because you’ve moved into long-term care or have passed away.
Equity release includes both Home Reversion Plans and Lifetime mortgages, and lets homeowners release tax-free cash from the value of their home with the amount you can take dependant on your age and the value of your home.
A Lifetime mortgage is secured as the first charge on your main residence. You always remain the owner. You can choose to protect some of the value of your home as inheritance for your family. You can choose to make repayments voluntarily, monthly or annually or simply let the interest roll-up and make no contribution to the interest accrual at all. The loan amount and any accrued interest is then paid back at the end of the mortgage.
With a Home Reversion Plan, you sell all or part of your home in return for a cash lump sum, a regular income or both. When your home is eventually sold, the reversion company gets their share of the proceeds of the sale. If you sold the entire property to them, they’ll get all the proceeds. If you sold part of your home, say a half, the reversion company gets that share of the proceeds, leaving the rest to go towards your inheritance.
If it is determined that this type of mortgage is the most appropriate, then we can refer you to a specialist third party for further support.