What is a lifetime mortgage?
A lifetime mortgage is a way to release tax-free equity from your home. As it is simply a loan against the value of your home, you retain the ownership. Once you clear any other charges against your home usually through equity, you can spend the money however you like.
Are there any guarantees?
Firstly, equity release is a regulated activity. It is regulated by the Financial Conduct Authority (FCA). In addition to this, there is a set of standards that providers of the service must adhere to. These are enforced by the industry’s trade body, the Equity Release Council (ERC). All ERC-approved lenders must:
- Offer fixed rates of interest for the duration of the loan
- Give you the right to remain at home for your life or until you move into long term care
- Include a ‘no negative equity guarantee’ which means that you cannot get into any lifetime mortgage debt despite the value of your home.
Who are the Equity Release Council?
Over 30 years, the Equity Release Council continues to represent the equity release sector and exists to promote high standards of conduct and practice in the provision of and advice on equity release which have consumer safeguards at its heart. The Council also works to secure awareness of the role housing equity can play in later life, whether that be funding of care, support family members, or simply to achieve lifestyle enrichment and peace of mind.
How will equity release affect my loved ones?
It is recommended that you involve your family in the equity release process. An adviser can talk through the plans available and ensure you get the most suitable plan for you. Many equity release clients tend to use a lifetime mortgage to help put their legacy into action early. This allows them to help loves ones in the shorter term.
What costs are associated with equity release?
There is associated interest with a lifetime mortgage which rolls up monthly. All legal advisory fees are usually paid for out of the equity that is released. This would be broken down during your consultation and explained to you. The interest will be relative to how much equity you release.