Page 5 - ShortShort guide 2020
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Lifetime Mortgage
These plans are the most common on the market and can be split into several different subdivisions, which offer a range of different benefits. A standard Lifetime Mortgage policy allows you to release a tax free lump sum based on the current value of your property. There are no requirements and no regular monthly repayments to make; as the amount you have released, plus any interest accrued is paid off with the money made when the property is sold. Normally this is when you have died, or permanently leave the property for long term care etc. You will continue to own your property for the full duration of the loan, and as such will benefit from any increase in your property value.
Interest Only Lifetime Mortgage
Similar to a standard Lifetime Mortgage, this plan gives you a tax free lump sum but you then make regular monthly repayments towards the interest amount. With some plans you can make full or partial payments, keeping the overall cost lower than other products. This has the potential to leave you with only the cost of the original loan to be taken out of the property value once sold.
