Later Life Finance
As the UK’s older population continues to grow, the home finance market has continued to evolve. A number of property finance products are on offer for older borrowers, with flexible, short and long term solutions.
Whether you are looking to refinance an existing debt, purchase a new property, help a relative or improve the condition of your property, Hera Financial will find the most suitable option for your needs in retirement. We also invite your family and relatives to be part of the process.
Lifetime Mortgages explained
Entering into a Lifetime Mortgage contract is a lifetime commitment, therefore it is important that borrowers understand the various options these loans offer.
How it works
Borrowers will be able to release a portion of the value of their home. The sum available to borrowers will depend on the value of their home, and the age of the borrower at the time of application (in the case of couples, the youngest age will be used). The provider will also make an assessment of the property by instructing a professional surveyor to undertake a survey. Borrowers can release up to 55% of the value of their home (typically available for borrowers aged 85 and over). The interest rate charged on the loan is fixed for the rest of the borrower’s life.
Interest roll up
Lifetime Mortgages do not require borrowers to make monthly payments; however, most products available in the market now offer borrowers the option to make payments if desirable. These payments are often capped at 10% of either the initial amount borrowed, or the amount outstanding. Lifetime Mortgage providers will not undertake an income and affordability assessment.
Drawdown facility
Borrowers are not required to take all of the funds available to them at once, they can draw down a smaller portion of the funds as and when they need them. Some borrowers use this option as a form of income replacement, or when undertaking refurbishments.
Porting
Some of the products available in the market now offer borrowers the option to take their Lifetime Mortgage with them to a new property, whether they are upsizing or downsizing. Porting will be subject to valuation and property suitability tests.
What can I do with the funds?
Lifetime Mortgage providers are very flexible when it comes to the purpose of the funds. Borrowers tend to use these mortgages for the purpose of:
· Gifting to children and grandchildren
· Travelling
· Purchases of goods they were not previously able to afford
· Repayment of interest-only mortgages
· Debt consolidation
· Purchase of a property
· Home renovation and improvements
Mortgages
Retirement Interest Only Mortgages (RIOs)
Retirement Interest Only Mortgages (RIOs)
Retirement Interest Only Mortgages (RIOs)
Designed to be in place for the rest of a borrower’s life, RIOs take into account affordability and retirement income. These cases are often assessed based on the last survivor and their ability to maintain monthly interest payments should the highest earner die. These mortgages allow clients to make only interest payments, in order to re
Designed to be in place for the rest of a borrower’s life, RIOs take into account affordability and retirement income. These cases are often assessed based on the last survivor and their ability to maintain monthly interest payments should the highest earner die. These mortgages allow clients to make only interest payments, in order to reduce their monthly financial commitments. Borrowers can apply for 65% loan to value. As well as traditional mortgages, borrowers can opt to have a fixed rate for a number of years, and then refinance on a better rate if available.
Interest Only Mortgages
Retirement Interest Only Mortgages (RIOs)
Retirement Interest Only Mortgages (RIOs)
Interest Only Mortgages can also be obtained by borrowers looking to secure a mortgage in retirement. Lenders will undertake an income and affordability assessment, and will need to be confident that borrowers have a suitable exit strategy; this could be selling their current home and downsizing. This is often a preferred option for bor
Interest Only Mortgages can also be obtained by borrowers looking to secure a mortgage in retirement. Lenders will undertake an income and affordability assessment, and will need to be confident that borrowers have a suitable exit strategy; this could be selling their current home and downsizing. This is often a preferred option for borrowers because the cost of traditional Interest Only Mortgages is lower than other Later Life finance products available. Depending on the borrower’s age, some lenders will take into account employment as well as retirement income. These facilities are arranged for a fixed term.
Repayment Mortgages
Repayment Mortgages
Repayment Mortgages
Some borrowers prefer to ensure their debt is paid off at some point in their lifetime, therefore lenders offer Repayment Mortgages to borrowers in retirement, subject to affordability. These facilities are arranged for a fixed period of time and, depending on the borrower’s income and the lender’s criteria, the loans can be arranged until borrowers reaches their 90s.
Short- term Finance
Repayment Mortgages
Repayment Mortgages
Also known as Bridging finance, it is often used by borrowers in retirement looking to complete an urgent transaction when purchasing or refinancing a property. These transactions are arranged for a short period of time, typically 12 months. These loans are paid off by selling the property but can also be paid off by refinancing the property onto a term mortgage.