Equity Release FAQ

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Will I lose my home if I use a Lifetime Mortgage?

No, Lifetime Mortgages allow you to maintain ownership of your home for the rest of your life.

How do I make payments if I want to avoid interest roll up?

Depending on your circumstance and the particular provider, you may set up a standing order to make monthly payments, or you can also make ad hoc payments by contacting the provider directly after the funds have been released. Remember you are not committed to making these payments, therefore it is entirely up to you how you manage your facility.

Can I pay off my Lifetime Mortgage early?

Lifetime Mortgages are long term commitments, therefore if you were to redeem your loan there will most likely be a redemption penalty to pay. Lifetime mortgages offer fixed and variable redemption penalties. If your intention is to pay the facility off early, a Lifetime Mortgage may not be the best product for you. 

There are times when a redemption penalty won’t apply:

· If you are porting your Lifetime Mortgage and redeem a portion of it as part of the transaction.

· If you move into care because you are no longer able to look after yourself.

· If you move to a property that is not suitable and you are covered under a downsizing protection guarantee.

· If, in the case of a couple, one of the parties dies or moves into care, then the surviving party can redeem the loan within 3 years without incurring any penalties. 

How long will the redemption penalties be in place for?

Some providers offer fixed redemption penalties for a period of time, typically between 8 to 15 years. Some plans are linked with gilt yields, which means you may be exposed to penalties for the duration of the loan. Your advisor will explain both options in details.

How long is my drawdown facility available, and could the provider refuse to give the funds when requested?

You have access to your drawdown facility for the rest of your life, at any time when you need the funds. There is no limit on how many drawdowns you can make subject to oroviders’ minimum amounts as long as there are funds left on your pre-agreed facility. Providers will refuse further drawdowns if they feel you may be influenced by other to use the funds, or if the purpose of the drawdown is not acceptable to them – for example, entering into risky investment schemes.

Will the interest rate charged on my Lifetime Mortgage change?

Most Lifetime Mortgage providers offer fixed rates on their products, therefore you will always know how much is added to your loan.

If I use a home reversion plan and sell 50% of my home, would I be able to buy it back?

Home reversion providers will offer you less than the market value for the portion of the property you have sold. You can buy it back, however they will expect you to pay the market value.