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      What is a Lifetime Mortgage and will it work for me?

      9 May 2018 by Andrea Godfrey

      Andrea Godfrey
      Lifetime Mortgage

      The Equity Release Council announced recently that there was a record number of homeowners in the last quarter of 2017 who entered into Lifetime Mortgages; also known as Equity Releases. As a result, the housing wealth exceeds £3 billion for the first time in one single year.

      But what exactly is a Lifetime Mortgage / Equity Release?

      And what are the advantages / disadvantages of a Lifetime Mortgage / Equity Release? 

      There may be many reasons why retiring homeowners want to release some of the equity in their property. Maybe they want a nest egg to enjoy their retirement, fulfill a lifetime ambition, or even landscape the garden. Some may have a mortgage outstanding with no cash to pay it and they really don’t want to move. A Lifetime Mortgage may be a suitable solution to some people.

      The Lifetime Mortgage is generally available to homeowners aged 55 or over. Generally, you can borrow up to 60% of the value of your house. The money is released to you in a large lump sum or in some cases smaller amounts over a period of time and you can do anything you want to with it. Of course, interest is charged on the amount you borrow but it’s added to the loan.

      The following are the normal terms of a Lifetime Mortgage:

      • You retain ownership of your house.
      • Can decide whether you want to make monthly payments or not pay anything at all.
      • You don’t have to pay any of the Lifetime Mortgage back until you either sell your house (e.g. the last one of you has to go into care) or when you die. If you are a couple it does not have to be paid back until the last one of you dies.
      • In most cases, you can move house and transfer the Lifetime Mortgage to your new home.
      • You cannot go into negativity equity – so even if your house value fell below the loan amount you (or your estate) will not have to pay the deficit.
      • If the value of your house increases, you/your beneficiaries will still reap the benefit.

      A disadvantage is that of course the equity in your house is reduced so there will be less money for any beneficiaries named in your Will. They could also affect your entitlement to state benefits.

      Another option is a home reversion plan. The difference between this and the Lifetime Mortgage is that with home reversion plans, you are selling a share in your house but no interest is added.  We do recommend that you see a financial advisor though to determine whether an equitable release is suitable and which product is best for you.

      How can Fisher Jones Greenwood Solicitors help?

      You can use any Solicitor of your choice in Lifetime Mortgages. Our Solicitors Susanne Grimwade,  Andrea Godfrey & Sarah Rankin are all members of the Equity Release Council and will ensure you fully understand the consequences of taking out an Equity Release and guide you all the way. To speak to one of our Solicitors, call 01206 700113 or email [email protected]

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      Fisher Jones Greenwood is the trading name of Fisher Jones Greenwood LLP, a Limited Liability Partnership authorised and regulated by the Solicitors Regulation Authority and registered in England ( Number: OC305854 ). A list of members is available for inspection at the registered office at Charter Court, Newcomen Way, Colchester Business Park, Colchester, Essex CO4 9YA

      We are open for business and working remotely

      Here at Fisher Jones Greenwood Solicitors we would like to reassure all our existing and future clients that even in these uncertain and difficult times we are able to assist you with your current and future legal requirements.

      Like so many others, we are constantly monitoring and acting on Government advice and guidelines and as such our offices are temporarily closed to the public. You may, if you wish, visit our offices to post any correspondence and documents through letter boxes.

      As a result of our commitment to innovation and technology, we can and are maintaining a full service, albeit remotely, with all appointments being held digitally or via the telephone. Our case management system enables us to have full access to your electronic file from any location and we have a core team of staff processing all incoming post directly onto your file so that your legal adviser can continue to work with you. We are pleased to say that we do not currently anticipate any disruption to your matter.

      Please do not hesitate to contact your legal adviser by email or by telephone should you have any worries or concerns. Alternatively, please call our main switchboard number (01206 835300) and a message to return your call will be by relayed to the relevant person.

      Finally, everyone at FJG would like to wish you, your families and your colleagues well throughout this current crisis.

      Best wishes
      Paula Cameron
      Managing Partner