Advanced Mortgage Services Ltd
We provide Independent Advice from the Whole Market
Equity Release Risk Warning.
Lifetime mortgage, or home reversion plan.
Equity release may affect your entitlement to state benefits and could reduce the value of your estate. To understand the features and risks, ask for a personalised illustration.
Please think carefully before securing other debts against your home.
A Lifetime mortgage involves taking a type of mortgage which does not require monthly repayments, although with some plans, rather than roll up the interest you can opt to make monthly repayments if you wish.
You retain ownership of your home and interest on the loan is rolled up (compounded). The lifetime mortgage is secured on your property and is registered with land registry the same as with a standard mortgage. There is no day-to-day interference and no restrictions on treating the house exactly as before
The loan and the rolled up interest is repaid by your estate when you either die or move into long term care. If you are part of a couple, the repayment is not made until the last remaining person living in the home either dies or moves into care, meaning that both you and your partner are free to live in your home for the rest of your lives.
If you take out a Lifetime Mortgage, you can choose to receive your funds in a lump sum or in smaller, regular amounts. There is also an option available to increase the amount you have borrowed as and when you want to, up to the maximum limit agreed with the plan provider. This is called a draw down facility and amounts from as little as £2000 can be requested and be transferred to your bank account within a few days. Interest is only charged on funds which have been drawn down (transferred to your bank). By delaying taking all the money available to start with you can significantly reduce the total loan that will eventually need to be repaid.
With some providers you can also elect to protect some of the value of your property as an inheritance for your family, meaning that you can benefit from releasing equity while still retaining something to pass on to your children.
Some people may be able to release larger lump sums due to impaired health or may prefer to make monthly repayment in part, or in full, with an option to roll up at a later date if the monthly repayments became unaffordable.
With a Lifetime Mortgage the amount initially borrowed accumulates interest over time and can grow significantly due to the effect of compound interest. This is where interest is charged on interest already accumulated. As an example if someone was to release £46000 at a fixed interest rate of 5.99% (Annual Percentage Rate 6.16%) then after 10 years the amount owed would have grown to £83,609 and after 15 years the amount owed would have grown to £112,844. Set against this you would still own 100% of your property and benefit from 100% of any home improvements and any increase in property value.
Your home is at risk of repossession if you do not keep up repayments on a mortgage or any other loans secured on it and you should think carefully before securing any debts on your home
Advantages of a lifetime mortgage
Disadvantages of a lifetime mortgage
Advanced Mortgage Services Ltd is an appointed representative of The On-Line Partnership Limited which is authorised and regulated by the Financial Conduct Authority. Advanced Mortgage Services is registered in England. Company registration number 4751565.
Cherry Tree House, 20 Inverleigh Road, Bournemouth, Dorset, BH6 5HA.
Advanced Mortgage Services Ltd website is only for the use by UK residents & is subject to the UK regulatory regime.