Experts in Later Life Lending
The Autumn of our lives tends to occur from our 50s to our 60’s, this is a time when many of us have managed to pay off our mortgages, are at the top of our careers and our children have either left home or are financially independent and in some cases with children of their own.
It can also be at this time in life, when we start to make changes to your homes and they may need to be future-proofed for longer independent living and cash needs to be made available to assist in some of these expenses.
Whatever your reason for needing access to additional funds, later-life lending may be an option for you to explore.
There are two main routes to utilising the cash we have invested in our properties, these tend to fall into either life time or retirement mortgages.
Lifetime Mortgage -Equity Release
A lifetime mortgage is a long-term loan secured against the value of your home that allows you to access some of the money tied up in your property. You can continue to live in your home and retain ownership, and you don’t need to repay the loan until you die or move into long-term care.
Here are some key features of a lifetime mortgage:
- No monthly repayments: You don’t need to make monthly repayments on the loan amount itself. Instead, interest builds up on your loan each year, which quickly increases the amount you owe.
- Repayment: The loan plus interest is repaid through the sale of yoberour property.
- Types of lifetime mortgages: There are two types of lifetime mortgages: interest roll-up and interest-paying.
- Optional repayments: You can choose to make partial repayments to manage the amount owed on the loan and interest.
- Protecting equity: You can protect some of the value of your property as an inheritance for your family.
- Eligibility: Lifetime mortgages are available to homeowners aged 55 and over
Retirement Mortgages
As we get older it can become increasingly difficult to get a remortgage and if you are over 50 there is an alternative option, known as a retirement mortgage. These can also be called a Retirement interest-only mortgage or an RIO mortgage and can be a good alternative to a lifetime mortgage or equity release.
Who can access a retirement mortgage?
Every lender has their own rules but generally, you would need to be over 50 or in some cases 55, there would need to be a minimum value of equity in your home and it would need to be your main residence and you would need to be able to prove you can afford the payment now and into your retirement.
Always read the T&Cs for a retirement mortgage or talk to one of our expert advisers, as there are some lenders that would require the load to be repaid at the end of the term. Book Your Free Retirement Mortgage Consultation.
What are the differences between lifetime mortgages and retirement mortgages?
Both of these options can release equity from your home but there are differences between the two products.
- There is a minimum age for both products, but you can usually be younger for a RIO Mortgage.
- The application process for the RIO mortgage can be more rigorous as you are going to need to be able to prove you can afford the payments.
- The RIO mortgage you make monthly payments, the lifetime mortgage, the interest rolls and is paid back to the lender at the end, there are no monthly payments.
- Some lenders may allow you to borrow more on a RIO mortgage at 55.
- Always take qualified advice before making any decisions.