Key Lifetime Mortgage Factors To Consider in 2023
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Lifetime Mortgage Questions and answers
1. What is the criteria for a lifetime mortgage?
The main criteria for a lifetime mortgage are a minimum homeowner age of 55, your home value must be over £70,000, and any existing outstanding mortgage must be repaid from any funds released. Ensure you speak to a qualified equity release adviser to understand the criteria for your specific circumstances. For example, flats tend to have lending caps applied for the level of money available.
2. What are the pitfalls of a lifetime mortgage?
There are no pitfalls as lifetime mortgages advice is FCA (Financial Conduct Authority) regulated. However, it is important for homeowners to seek qualified advice to ensure the mortgage is being arranged in the most economical way and to discuss your plans with family members if you need any additional support, for example. Previous issues with lifetime mortgages arose from the effect of equity compounding at high interest rates, and also a lack of flexibility for a surviving homeowner on first death. Flexibility has changed in recent years. Modern plans contain a clause allowing the mortgage to be repaid on first death with no early repayment charges for flexibility in case the surviving home owner wishes to downsize and repay the mortgage, for example.
3. Who is the best lifetime mortgage provider?
This depends on your specific requirements. Your individual priorities will determine who the best provider is for your needs. A provider offering the most competitive interest rate may not offer 'downsizing protection, for example when moving home. Ensure you discuss exit criteria with your adviser, as this may be more important to you than the interest rate on the mortgage for your longer term economical benefit to avoid high exit fees.
4. What is a typical rate for a lifetime mortgage?
Interest rates in 2023 are starting around 6% up to 8%, depending on the level of funds required, however interest rates may decrease over the coming months. Request an up to date illustration as these change on a weekly basis.