How Does a Lifetime Mortgage Work in Cambridge?

A lifetime mortgage is form of later life mortgage, available to homeowners aged 55 and above. It allows you to unlock some of the money tied up in your home, without the need to sell it or move out. The amount you can borrow depends on your age and the value of your property.

With a lifetime mortgage in Cambridge, you don’t need to make any monthly repayments like you would with a regular mortgage. Instead, the loan is repaid when you pass away or move into long-term care. Over time, the amount you owe increases because of the interest that accumulates.

Many mortgage lenders offer the option to let the interest roll up, meaning it gets added to the total loan amount.

When the property is finally sold, the loan is repaid using the money from the sale. It’s important to understand that taking out a lifetime mortgage can reduce the inheritance you leave behind for your loved ones.

Additionally, if you choose not to pay back the interest, it may impact your eligibility for means-tested benefits.

It’s always a good idea to seek mortgage advice from a qualified professional before considering a lifetime mortgage in Cambridge, to understand the potential implications and make an informed decision.

The Difference Between Lifetime Mortgages and Equity Release

A lifetime mortgage in Cambridge is a specific type of equity release product that allows homeowners to borrow money against the value of their property. It’s one option within the broader category of equity release in Cambridge, which includes other types of products.

Another option in Cambridge is a home reversion plan. With this plan, homeowners sell a portion of their property to a provider in exchange for a lump sum of money.

Whether you’re considering a lifetime mortgage, a home reversion plan, or alternatives like a retirement interest only mortgage, it’s very important to seek advice from a qualified mortgage advisor. They can provide expert guidance tailored to your specific situation, helping make informed decisions.

Types of Lifetime Mortgage

There are two main types of lifetime mortgages: lump sum and drawdown.

A lump sum lifetime mortgage lets you release a large amount of money all at once. You have the ability to release as much as you want, when you want it, but keep in mind that your loan will be larger as a result.

With a drawdown lifetime mortgage, you can release funds as you need them. This means you don’t have to take out everything at once. You only pay interest on the amount you actually release, making it a more suitable option if you don’t need all the money there and then.

When considering either of these lifetime mortgages in Cambridge, you’ll have the choice to let the interest build up over time. It’s important to note that this will affect the amount of inheritance you can leave behind after the sale of the property and repayment of the loan.

The good news is that a mortgage advisor in Cambridge can help you protect a portion of your equity for inheritance purposes. Additionally, as members of the Equity Release Council, we offer a “No Negative Equity Guarantee.”

This guarantee ensures that even if your debt goes beyond the value of your property, your estate will never owe more than what the property is worth. Any excess debt is simply forgiven.

This guarantee provides peace of mind, knowing that your family won’t be burdened with additional financial obligations.

How is a lifetime mortgage repaid?

Once your lifetime mortgage in Cambridge comes to an end, whether due to your passing or moving into long-term care, the amount you borrowed from the mortgage lender needs to be repaid.

This repayment is done through the sale of your home. Keep in mind that over time, if you chose not to make interest payments, the total amount to be repaid will include the accumulated interest.

It is the responsibility of your beneficiaries or the executors of your estate to initiate the sale of the property in order to repay the mortgage lender. Usually, there is a 12-month period given to complete this process.

If the property has not been sold within that time frame, the mortgage lender may step in to start the sale themselves. They understand that it may not always be possible to sell the property within the given period, taking into account current market conditions.

As long as the sale price is fair and reflects the market value, they tend to be flexible in such situations.

What are the pros and cons of a lifetime mortgage?

A lifetime mortgage in Cambridge is a type of equity release product that allows you to unlock the value of your home without selling it.

It can provide you with a lump sum of money or regular income in exchange for a share of your home’s value. Before deciding, it’s important to weigh the advantages and disadvantages.

One major advantage is that you can access the equity in your home while still living there. You don’t need to make any monthly repayments, as the interest is added to the loan balance. The loan is typically repaid when the property is sold, usually after you pass away or move into long-term care.

That being said, there are some things to consider. The amount you can borrow depends on factors like your age, health, and the value of your property. If your health declines or your property’s value decreases, you may be able to borrow less than expected.

Since interest is charged on the loan, the total amount you owe can grow over time, reducing the inheritance you leave behind. It’s also important to understand that taking a lifetime mortgage can impact your eligibility for certain state benefits, such as pension credit or council tax reduction.

To make an informed decision, it’s recommended to seek expert advice from a specialist mortgage advisor who can help you understand the potential impact on your circumstances. Carefully weigh the pros and cons before deciding if a lifetime mortgage in Cambridge is the right choice for you.

Speak to a Lifetime Mortgage Advisor in Cambridge Today

We understand that equity release in Cambridge and lifetime mortgages can be complex, which is why we offer a free appointment with a specialist mortgage advisor in Cambridge. During this appointment, you can discuss your unique situation and determine if a lifetime mortgage is suitable for you.

Our dedicated mortgage advisors will take the time to explain the benefits and drawbacks of a lifetime mortgage in Cambridge. They will address any concerns or questions you may have and guide you through the application process if you choose to move forward.

It’s important to involve your family in these discussions as well.

Don’t hesitate to book your free mortgage appointment today. We’ll explore the options available, such as equity release in Cambridge through a lifetime mortgage or other alternatives like retirement interest only mortgages. Together, we’ll determine the best path for you to take.

To understand the features and risks, ask for a personalised illustration.

A lifetime mortgage may impact the value of your estate and it could affect your entitlement to current and future means-tested benefits. The loan plus accrued interest will be repayable upon death or moving into long-term care.

Date Last Edited: February 23, 2024