Lifetime Mortgages involve taking out a mortgage against the value of a property. Interest is not normally paid on the loan during the client's lifetime. Instead, the interest is rolled up and the entire loan (capital plus interest) is repaid from the sale of the property on their death, or when they move permanently into care.
If the amount required to repay the mortgage exceeds the value of the property when your client dies, the excess should be covered by the lender, if the lender is a member of SHIP. This is due to the ‘no negative equity guarantee’ offered by SHIP members.
The amount of mortgage your client can raise will depend on their age and the value of their property.
| Advantages | Disadvantages |
| Available to those as young as 55 (Just Retirement only accepts customers aged 60 and over). |
Will affect the value of inheritance for family members. |
| Ownership of the home is retained as is the potential benefit from any rises in house prices. |
Debt will grow over time, although this can be limited by only releasing the money your client needs, as they need it.
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| Certainty - your client knows how much money they will receive from the scheme at the outset. |
The entire equity in your client’s property may be exhausted, leaving nothing for their family. |
| Possibility of leaving some equity to heirs, depending on house price changes and the size and length of loan. |
If your client chooses to repay the loan early, early repayment charges may apply. |
| Possibility of drawing money as a lump sum, ad hoc payments or on a regular basis. |
Your client’s eligibility for means tested benefits may be affected, as might their options for moving or selling their home in the future. |
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