What does the term lifetime mortgage mean and could it be an alternative to remortgaging? It's something one of readers was pondering and we asked our equity release expert Mark Gregory to shed some light on the matter…
The Question
Are lifetime mortgages and equity release the same? I had a brief discussion with a mortgage broker recently whilst making an enquiry into a remortgage and he said I could consider ‘lifetime mortgage options’ because of my age (62). But I didn’t understand what he meant.
I was too embarrassed to ask, so hopefully you can shed some light and I can remain anonymous in my ignorance. Thank you!
Mark’s Answer
Thanks for your question, and there is no need to remain anonymous as your misunderstanding is expected as Equity Release and a Lifetime mortgage are in-fact the same thing.
Let me explain, I have been an adviser and now a CEO of my company, working in equity release for over 20 years, and what has happened over the last 10 years or so is that the flexible Lifetime mortgage has taken centre stage and become the word many experts talk about when raising capital from the equity in your main residence.
At your age there may be several options available if you are looking to raise capital including a lifetime mortgage and a home reversion plan, which are both equity release and require an enhanced qualification from an adviser.
So, as you have been chatting to a traditional mortgage adviser they may have recognised that as you are 62 there are several options available for you to remortgage and raise capital, and it would be best to talk to an equity release specialist who will consider all options for you including traditional mortgages and equity release.
For example, as you are over the age of 55, and if your home is worth more than £70,000 with equity release and a flexible Lifetime Mortgage, this allows you to retain 100% ownership of your home and you secure a mortgage for your entire life with a fixed rate of interest.
You then decide if you want to service the interest by making monthly, or adhoc payments, or make no payments at all. The mortgage and any interest is repaid from the sale of your home when you either die or need to enter long-term care.
You can include an inheritance protection guarantee and many other features, but these features are added to your loan, depending on your circumstances. An alternative option is a Home Reversion Plan which is equity release, where you sell a share of your home in return for a cash lump sum, and again you can live in your home for the rest of your life, and you will not pay rent on the share of your home that you have sold. When you pass away or need care, your home is sold, and any remaining share is left to your beneficiaries.
Therefore, to understand more about equity release and your options, feel free to discuss your plans and objectives with one of our expert, fully qualified equity release advisers who will guide and help you without obligation. Furthermore, you can ask them as many questions as you like without embarrassment, because they help and guide customers like you every day.
Meet our expert…
Mark Gregory, founder and CEO of Equity Release Supermarket, is here to answer your questions. Mark is an adviser himself with over 20 years equity release experience.
He launched Equity Release Supermarket 10 years ago and it has grown to become one of the UK’s leading equity release specialists.
Email kate.saines@emap.com to ask Mark a question
