Lump Sum Lifetime Mortgage
The most traditional of all equity release schemes is the lump sum lifetime mortgage which also has many legacy products which have been left behind due to the recent innovation of drawdown & interest only lifetime mortgage schemes.
However, for many homeowners looking for ways to maximize their financial security and freedom during their retirement years, the lump sum lifetime mortgage can still offer the simplicity that people still require.
There are a variety of different schemes available but a lump sum lifetime mortgage may be able to give you just the right amount of financial control you need over the course of your retirement years. Through this particular equity release scheme, you are able to release a sum of money from the value you have saved up in your home. This means that you may have more cash on hand to help with monthly bills, home repairs, or paying off debts. This cash payment can be used for anything. In exchange for the lifetime mortgage, you are able to stay living in your home for as long as you want.
The loan secured against the home is typically paid off when the home is eventually sold. This most often occurs when the homeowner has either passed away or has moved into permanent long term care. At that point the home is sold with the proceeds repaying the lender & any remaining balance passes onto the beneficiaries.
Through a lump sum lifetime mortgage, you may be able to borrow a percentage of the property value of your home via a lump sum. The percentage that you may be able to borrow, as well as the interest rate you will be given could depend on a couple of different factors, most notably your age. So, the amount and terms of your loan will be individualized to your particular situation and needs.
There are a number of different features that make the lump sum lifetime mortgage a unique choice for those looking for an equity release scheme:
1. You are able to release a cash payment which can be secured against the value of your home.
2. You can borrow an initial amount but may be able to make future withdrawals from the value of your home. This depends on a couple of different factors, including the criteria set by your lender such as age & future property value.
3. You may not have to make any interest payments on a regular basis. This can free up more cash on a monthly basis.
4. You may qualify for a ‘no negative equity guarantee’ which would ensure that your estate would not be left in the negative after the same of your home, even if the loan amount you must repay is more than the amount for which your home is sold.
With many lump sum lifetime mortgages, you are able to take out future withdrawals against the equity saved up in your home. This would mean that you would be able to borrow the initial amount you need but may be able to come back for more cash should you find that you need or want extra funds during retirement. This kind of flexibility allows you to only pay interest on the amount borrowed which can eventually save you money over the long term, especially if you only borrow the money that you actually need at that present time. The downside to this is that you may be required to go through some of the expenses you incurred when you first incepted the plan. This wouldn’t have occurred if a drawdown had of be opted for in the first place. Hence, before entering into any equity release transaction, consider not just your needs of today, but consideration should also go to any future potential spending requirements.
There are a variety of different ways in which to maximize a lump sum lifetime mortgage and an independent equity release adviser will be best equipped to help guide you through choosing the right option for you and your particular needs.