You can lend your age minus 30 as a percentage of your home with a lifetime mortgage, more if you can afford to make monthly payments to stop, or slow, the roll-up of interest.
For example, if you are 65 years old, you will be able to lend approximately 35 of your home’s value on a lifetime mortgage without having to make monthly payments.
If you can afford to make monthly payments you will be able to borrow more, this is called an interest-only lifetime mortgage.
The above figures are used as a general guideline, the exact amount you can borrow will depend on your situation.
If you are looking to purchase a new home, using a lifetime mortgage, often called equity release, will allow you to look for a more expensive property which may be more suitable for your requirements.
If you are considering releasing equity from your home via a lifetime mortgage and do not require all the money at once, a drawdown lifetime mortgage may work well for you.
This is where you receive the money in smaller chunks, this method can save you a lot of money in interest in the long term.
The money raised via a lifetime mortgage can be spent as you wish, popular uses are home improvements, a large purchase such as a car or motor home, a caravan, helping family members, or as an income to supplement your pension.
A lifetime mortgage is a long-term lending solution, if you are looking for more short-term lending then there may be more suitable bridging loan products available for you to help you downsize etc.
Suppose you are over the age of 55 and considering your lifetime mortgage options. In that case, it is always a good idea to speak to a specialist later-life broker as there may be more suitable products available to you.
A lifetime mortgage should always be the last resort; therefore, all traditional lending and retirement interest-only mortgages should be explored beforehand.
With all the products available to you, if you can afford to pay a monthly payment towards the interest, this can save you a lot of money over the term of the loan.
With a lifetime mortgage, the interest rolls up, therefore you start to pay interest on your interest on your interest etc.
The more you can contribute, even if it is a small amount or for a few years, the more money you will save over the long term.
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