Increased demand for lifetime mortgages and greater competition between lenders are among the reasons why equity release and Lifetime Mortgage interest rates reached unprecedented lows in 2020.
Equity release interest rates are lower than they have ever been with more than half of the products that are available offering rates below 4% and a quarter have rates below 3%, they are also fixed for the whole term. An ever-increasing number of products also gives homeowners greater flexibility when it comes to repayments, making this the perfect time to consider equity release as a means of accessing tax-free cash from your property.
With a lifetime mortgage, the most popular type of equity release scheme, you are under no obligation to make repayments. Repayment is only due once the last surviving homeowner either dies or enters permanent longterm care, at which point it is usually achieved with the sale of the home. But if you choose not to make repayments, the interest will build up over time and be added to the sum owed, with lifetime mortgage interest rates so low, the impact of this build-up is lessened, minimising the effect that releasing equity could have on your estate’s value. If the build-up of interest does still concern you, it may be worth considering one of the many products that offer the facility to make flexible payments, such as one that allows you to pay off part of the interest each month.
The Equity Release Council since 1991 have worked hard to ensure that this is a highly regulated industry, there are strict rules in place for your protection.
There are many questions here are a few which we are asked frequently.
1, Will you have to stay in your property for the rest of your life.
No, with most Equity Release providers you can move home and transfer your Lifetime mortgage to your new property, subject to the new property meeting the lender's requirements.
2, Would this leave debt to your family and loved ones.
No, there is a No Negative Equity Guarantee, which means you will never owe more than the value of your home.
3, Can this be used to repay my current Interest Only Mortgage?
Yes, you can use a Lifetime Mortgage to pay off your current mortgage
4, Is it possible to repay a Lifetime Mortgage
Yes, some providers allow you to pay the interest or make regular optional payments of up to 10% per year.
5, Can I leave my property as an inheritance.
Yes, the beneficiaries would need to repay the balance from your estate, this can be by either selling the property or from other assets, they can also take out a mortgage themselves to repay the outstanding balance. You can also protect an amount of equity to be passed on to your beneficiaries.
6, Will I still own my own home?
Yes, in respect to Equity Release or Lifetime mortgages you will always retain ownership of your own home.
7, Can a Lifetime mortgage be used to buy a new home if I want to move?
Yes, you can use a Lifetime Mortgage to buy a new home.
It is important to seek Whole of Market Advice from a qualified advisor, who will take time to get to know you, your circumstances, and your aspirations, we are happy to discuss this with you and your family making sure that no questions go unanswered. We are a local established company looking after local people.
By Caroline Hall CeMap CeRER Director at Your Mortgage Hub
“A lifetime mortgage is a long term commitment which could accumulate interest and is secured against your home.
Equity release is not right for everyone and may reduce the value of your estate” Over 55 Homeowners Advert Approval Number: SOL 9701