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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.
Drawdown Lifetime Mortgage
Drawdown plans work in a similar way to standard lifetime mortgages but with the flexibility to ‘drawdown’ cash as and when you need it. You can take a smaller initial amount and then release cash over time. This can be more cost-effective as interest is only added to the money released so you could pay less interest over the course of the loan.
Income Lifetime Mortgage
With an income Lifetime Mortgage you can effectively ‘top up’ your pension with regular cash supplements from the Equity in your home. You can release the cash for a fixed term rate for anywhere between 10 - 25 years. The minimum amount of monthly payment you can receive from your policy is £200. Interest is only applied on the money you have withdrawn, not the full lump sum. Which helps to keep the interest amount low.