 Equity release - home reversionWhat is Home Reversion?
A Home Reversion Mortgage is when you sell part or all of your home to a Home Reversion provider in return for a lump sum or regular payments. You have the right to continue living in the property until you die, rent free, but you have to maintain and insure it. You can ring-fence a percentage of your property for later use, possibly for inheritance. The percentage you retain will always remain the same regardless of the change in property values, unless you decide to take further cash releases. At the end of the plan your property is sold and the sale proceeds are shared according to the remaining proportions of ownership. When considering a home reversion plan, and if it is the right product for you there are a number of things to think about. Whether or not you can release equity in several payments or in one lump sum. The minimum age at which you can take out a home reversion plan. Some home reversion providers insist you’re at least 60 or 65 before you can apply. The percentage of the market value you will receive. This will increase the older you are when you take out the plan but might vary from provider to provider. You have the right to remain in your property for life or until you need to move to long-term care, provided the property remains your main residence and you abide by the terms and conditions of your contract. (Equity Release Council standard). You have the right to move to another property subject to the new property being acceptable to your product provider as continuing security for your equity release loan (Equity Release Council standard). The product has a “no negative equity guarantee”. This means when your property is sold, and agents’ and solicitors’ fees have been paid, even if the amount left is not enough to repay the outstanding loan to your provider, neither you nor your estate will be liable to pay any more (Equity Release Council standard). What level of maintenance you’ll be expected to carry out and how often your property will be inspected (this could be every few years.) If you would like to discuss Home Reversion Plans or Equity Release in general please don’t hesitate to call us on 01303 721117 or submit a contact form www.ptmortgagesltd.co.uk  Equity Release - lifetime mortgagesWhat is a Lifetime Mortgage?
A Lifetime Mortgage is when you take out a mortgage secured on your property, provided it is your main residence, while retaining ownership. You can choose to ring-fence some of the value of your property as an inheritance for your family, you can also choose to make repayments or let the interest roll-up. The loan amount and any accrued interest is paid back when you die or when you move into long-term care. Most people who take out equity release use a Lifetime Mortgage. Usually you don’t have to make any repayments while you’re alive, interest ‘rolls up’ (unpaid interest is added to the loan). This means the debt can increase quite quickly over time. However, some lifetime mortgages do now offer you the option to pay all or some of the interest, and some let you pay off the interest and capital. In the same way ordinary mortgages vary from lender to lender, so do lifetime mortgages. When considering a lifetime mortgage, there are some things you need to know. The minimum age at which you can take out a lifetime mortgage is usually 55. We’re all living longer so the earlier you start the more it is likely to cost in the long run. You can normally borrow up to 60% of the value of your property. How much can be released is dependent on your age and the value of your property. The percentage typically increases according to your age when you take out the lifetime mortgage, while some providers might offer larger sums to those with certain past or present medical conditions. Interest rates must be fixed or, if they are variable, there must be a “cap” (upper limit) which is fixed for the life of the loan (Equity Release Council standard). You have the right to remain in your property for life or until you need to move into long-term care, provided the property remains your main residence and you abide by the terms and conditions of your contract. (Equity Release Council standard). The product has a “no negative equity guarantee”. This means when your property is sold, and agents’ and solicitors’ fees have been paid, even if the amount left is not enough to repay the outstanding loan to your provider, neither you nor your estate will be liable to pay any more (Equity Release Council standard). You have the right to move to another property subject to the new property being acceptable to your product provider as security for your equity release loan (Equity Release Council standard). Different lifetime mortgage providers might have slightly different thresholds. Whether you can pay none, some or all, of the interest. If you can make repayments, the mortgage will be less costly. However, with a lifetime mortgage where you can make monthly payments, the amount you can repay might be based on your income. Providers will have to check you can afford these regular payments. Whether you can withdraw the equity you’re releasing in small amounts as and when you need it or whether you must take it as one lump sum. The advantage of being able to take money out in smaller amounts is you only pay the interest on the amount you’ve withdrawn. If you can take smaller lump sums, make sure you check if there’s a minimum amount. At Prospect Tree Mortgages we offer expert advice in Lifetime Mortgages so if you have any questions or want to discuss yours or family circumstances please do not hesitate to contact us on 01303 721117 or via our contact form. |
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Prospect Tree Mortgages Ltd is an appointed representative of TenetConnect Services Ltd, which is authorised and regulated by the Financial Conduct Authority. TenetConnect Services Ltd is entered on the Financial Services Register (www.fca.org.uk/register) under reference 150643.
Prospect Tree Mortgages Ltd is Registered in England and Wales under reference 10112043. Registered Office Address: 3/4 Lemanis House, Stone Street, Lympne, Kent, CT21 4JN.
The information contained within this website is subject to the UK regulatory regime and is therefore primarily targeted at consumers based in the UK.
Prospect Tree Mortgages Ltd is Registered in England and Wales under reference 10112043. Registered Office Address: 3/4 Lemanis House, Stone Street, Lympne, Kent, CT21 4JN.
The information contained within this website is subject to the UK regulatory regime and is therefore primarily targeted at consumers based in the UK.
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