Later life lending can be used to purchase or refinance a main home, 2nd property or buy to let property.
Later life lending is made up of traditional mortgages, retirement interest only mortgages and equity release (lifetime mortgages).
Later life lending is used by homeowners for a number of reasons, whether it be to repay an existing mortgage, lower monthly payments, increase their standard of living/income, help family, early inheritance/inheritance tax planning, home improvements or to pay for care.
Yes. As these mortgages are first charge mortgages the current mortgage will need to be repaid either via the new mortgage or the borrower’s own funds.
For traditional mortgages and retirement interest only mortgages, an affordability assessment is required. The lender may also request proof of income. For lifetime mortgages there is no affordability assessment or requirement to prove income.
Traditional mortgages and retirement interest only mortgages both require monthly payments to be made. Lifetime mortgages do not require monthly payments to be made.
Yes. Some lenders allow customers to make interest payments. Each lender will have different rules around when and how interest payments can be made.
Lifetime mortgages allow “roll up” of interest. This means that each month interest is added to the amount borrowed and at the end of the mortgage the amount owed will be the total of the amount borrowed plus the rolled-up interest.
Traditional mortgages will need to be repaid by the borrowers at the end of the agreed term. Retirement interest only mortgages and lifetime mortgages are repaid on death or entry into long term care of the last borrower usually by the sale of the property.
Not necessarily. Many lenders will allow the outstanding balance to be settled from other funds not just by the sale of the property.
Yes, all later life mortgages come with the ability to overpay. Each lender will have different rules around how much and how often overpayments can be made.
All financial products come with some risks; all later life lending products are regulated by the Financial Conduct Authority. Lifetime mortgages are also provided by members of the Equity Release Council.
Lifetime mortgages come with a no negative equity guarantee. This means that at the end of the term, the amount to be repaid can be no greater than the value of the property.
These can vary by product but include:
The information provided is based on our current understanding of the relevant legislation and regulations and may be subject to alteration as a result of changes in legislation or practice. Also it may not reflect the options available under a specific product which may not be as wide as legislations and regulations allow.
All references to taxation are based on our understanding of current taxation law and practice and may be affected by future changes in legislation and the individual circumstances of the investor.