Lump Sum Lifetime Mortgages


What is a lump sum lifetime mortgage and how do they work? 

What is a lump sum lifetime mortgage?

Lump sum lifetime mortgages enable you to release some of the money tied up in your home in one single lump sum.  This differs from a drawdown lifetime mortgage where you release a smaller amount initially with a pre-agreed cash facility from which you release smaller amounts as and when required.  With a lump sum lifetime mortgage, some lenders are also able to consider taking any health and lifestyle conditions you may have into consideration which may result in the potential to borrow an even higher amount.

Typically how much can you borrow?

The maximum amount you can borrow will be determined by a number of factors, including your age and the value of your property. However, as a guide, you could borrow between £10,000 and £800,000 if you live in the UK.

Could I get this type of lifetime mortgage?

Everyone’s circumstances are different and you should consider lifetime mortgages very carefully.  You should discuss all of your options with a financial adviser. However, we can make some general statements about who is likely to qualify for a lump sum lifetime mortgage (must apply to both of you if borrowing jointly).  You must:

  • be 55 and over 
  • own your own home
  • be a UK resident

Your property must also be:  

  • in England, Scotland or Wales
  • your main residence
  • worth a minimum of £70,000
  • made of standard construction

How is the interest calculated?

Lump sum lifetime mortgages charge a fixed rate of interest.  You do not usually have to make any repayments until you die or move into long-term care, unless you choose to do so, however this may incur early repayment charges. 

Some products allow you to pay interest on a monthly basis, otherwise the interest will build up on a compound basis and can mean that the total amount you end up owing could be significantly more than you originally borrowed. For an explanation of compound interest please take a look at this short film:

Is there anything else I should know?

Lifetime mortgages may not be right for everyone. It may affect your entitlement to state benefits and will reduce the value of your estate.

We recommend that you talk to a professional adviser before making any decisions about buying equity release products. If you don’t have a professional financial adviser, go to thepfs.org or unbiased.co.uk.

Alternatively, HUB Financial Solutions – part of the Just Group – offers an equity release advice service that could help you decide if equity release is right for you.

Find out with HUB Financial Solutions.

 

In the meantime, we do have a handy tool – just for you

If you’re interested in getting an idea of what a lifetime mortgage could provide, our Indicative Lifetime Mortgage Calculator is here to help.

This provides an indication of the total you could release from your property, for new customers only. It is only an indicative figure and does not constitute an illustration, but it will provide a very interesting insight into lifetime mortgages. Click here to try it for yourself!