Home & Capital - Pros and cons of Lifetime Mortgages

Lifetime Mortgages

Some things you need to consider ...

Pros:

You continue to benefit from any rise in the value of your home.
If you die early or leave your home to go into care, you will only have accrued interest for a short time so you will minimise the cost to your estate.
If you arrange a Lifetime Mortgage with a SHIP member, you can never lose more than the value of your home - this is the "no negative equity" pledge.
Most lenders offer a fixed rate of interest which provides certainty and will be an advantage should interest rates rise.
In many cases, you can release additional cash in the future.

Cons:

As the mortgage increases through "rolled up" interest and the value of your home changes with market conditions, your net equity in the property changes daily. You cannot therefore guarantee that you can leave any of the property as an inheritance for your children.
If you live much longer than the normal life expectancy for your age, the equity in your home may start to decline. You could potentially end up with no equity at all.
If interest rates fall you could find your cost of borrowing is uncompetitive.

You will usually raise less money than with a Home Reversion plan.
There are usually early redemption charges should you wish to repay the Lifetime Mortgage before the end of the plan. The specific charges will depend on the company and product.

This may involve an Equity Release product. To understand the features and risks please ask for a personalised illustration.