If you are over the age of 55 and looking to release some of the equity in your property by means of a secured loan you may be considering a lifetime mortgage. If you are, you should know that there are different types of lifetime mortgages here are three main types:
Roll-up Lifetime Mortgage:– With this type of equity release program you are spared from paying interest and repayments during your lifetime. Instead, the interest is added monthly or annually to the amount you first received and everything repaid when your home is sold after your death or when you go into care.
The amount you receive via this type of equity release uk scheme can either be received as a lump sum or as a monthly income. However, the amount made available will be dependent on the value of your property and your age.
Fixed Repayment Lifetime Mortgage:– With this lifetime mortgage you receive the loan as a lump sum but you do not pay interest. Instead, either you or your beneficiaries will be required to pay a fixed amount when the home is sold. The amount to be repaid is normally much higher than the loan itself and is agreed upon in advance of the repayment time. The repayment amount will not be affected by how long it takes for the home to be sold.
Ordinary Interest Only Lifetime Mortgage:– The lifetime mortgage services of this nature allow you to preserve more of the equity on your property for the future by preventing the build up of debt. This option will only be profitable however if you are able to repay the interest each month. As a result of this when the property is sold, only the original amount borrowed will have to be repaid, leaving more equity for your heirs. This type of service also does not have a set repayment date.