Understanding Equity Release and How to Obtain a Lifetime Mortgage When Moving House
When moving house, you have a host of costs to bear and important decisions to make. One of which is what mortgage product you’ll use to finance your new home. And that’s a decision that’s as confounding for us in later years as it is for first-time buyers. A lifetime mortgage can make life easier when moving house in your later years. But what is a lifetime mortgage? What does it have to do with an equity release? And how can both be useful to you in your later years?
We’ll explain all here.
What is a lifetime mortgage?
Moving house may seem like an expensive prospect under all circumstances. But it actually brings great opportunities for savings. Just ask the team at Switch-Plan who can help you to save big money on your energy bills when moving house. Likewise, the right mortgage product when moving house can result in years of savings and improved household cash flow. Something that can be very important in your later years.
A lifetime mortgage can allow you access to the equity that you’ve built up in your home. This can be used as (or put towards) a bigger deposit that can get you more favourable rates on a new home.
What is an equity release?
Equity is the value of your home minus the cost of whatever mortgage payments you’ve already made. An equity release allows you to access the money that you’ve already put into your property.
How do you qualify for a lifetime mortgage?
Not just anyone can apply for a lifetime mortgage. You need to meet certain criteria to take advantage of this particular kind of mortgage product.
Specifically, you must:
- Be over 55 years of age.
- The property must be your main residence.
- You have sufficient income to make repayments, including interest.
A lifetime mortgage does not mean that you relinquish ownership of your home. You just have the ability to borrow back part of the equity you’ve built up.
The loan is repaid if you move into a smaller property with a lower value than your current property (and have equity left over). Alternatively, it may be settled after you have passed on or moved into long-term care.
Why might you need an equity release?
Moving house isn’t the only reason why retirement-aged Brits might want to consider an equity release. There are also a number of other reasons why you might consider releasing some of the equity in your home. Common reasons include:
- Wanting to supplement your pension income and enjoy retirement in style.
- Wanting to help children or grandchildren to get on the property ladder.
- Making improvements or adaptations to your existing home.
Whatever your reasons for considering a lifetime mortgage, we can advise you when choosing the perfect product for your needs.