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Reverse Mortgage

Lifetime Mortgage

A lifetime mortgage is a widely used as a “retirement tool” and is just one option that senior citizens. You should assess this option if you are looking to release capital from your home. You must ensure that you are: –

  • Able to afford it
  • That it makes sense and fits in with your requirements
  • Are you eligible

There are several ways in which an older person can benefit from a lifetime mortgage.

What happens when you take out a lifetime mortgage?

Lifetime mortgage is different from a traditional mortgage. The major difference is how equity works.

A Conventional repayment mortgage works by “decreasing debt and increasing equity&quot”. A reverse mortgage works in the opposite way: “decreasing equity and increasing debt”. You will be eligible for this mortgage provided you are:

  • 62 years old plus
  • You are the owner of the house in which you live
  • There is enough equity in your property
  • When you take out a reverse mortgage, you will receive payments from the mortgage lender and it is not the other way around which is the rule in case of a conventional mortgage.
  • You will retain home-ownership.
  • Since you retain home-ownership, you will be required to pay the taxes.
  • You don’t have to make monthly payments on the mortgage for the remainder of your life.
  • The proceeds don’t attract tax as it is a loan advance and not income.
  • You can use the amount you receive to meet various financial obligations. It may be funding a vacation, meeting medical expenses, paying for property tax etc.
  • Your income or employment details are not taken into account.
  • You will receive payments from the lender in various forms. It can be in the form of a lump sum payment, line of credit, monthly payment or a combination of the aforesaid options.

What are the drawbacks of Lifetime mortgage?

  • The equity in your property diminishes and your heirs inherit less
  • The costs involved are high
  • Prior to taking out a lifetime mortgage, it is recommended that you assess how it may affect your eligibility for help with benefits and social care as well as other Government aid programs.

However it is up to the individual to measure up the advantages and disadvantages of taking out a lifetime mortgage and many find that the benefits outweigh the drawbacks. For further details on how to stop repossession contact us today.