Lifetime Rate Mortgages

Who Needs Lifetime Rate Mortgages?

If you are in the retired status looking for extra income to sustain your health needs and lifestyle, the Lifetime Mortgage could be the answer. You simply borrow against the equity of your home, and you can have a lump sum that can make a real difference to your life - without having to move or sell your house.

What is a Lifetime Rate Mortgage?

Lifetime Rate Mortgage is a loan against the equity of your home. It does not require monthly repayments. It simply adds on the interest to the loan and the whole amount is repaid when you die or move into long-term care, usually from the sale of the house. This means more interest will build up compared to a conventional mortgage. But since the interest rate is fixed for life you know the rate you are obliged to pay.

The amount that can be borrowed depends on your age or the age of the youngest applicant, if there are two of you and the value of your property. A maximum of 55% of the property's value will be the amount of loan.

The loan will have to be repaid a maximum of 12 months after your death or the death of the last surviving of you if it is a joint mortgage. If your home or the property ceases to be your main residence, you will also have to repay the loan.

How to Qualify for a Lifetime Rate Mortgage?

  • You must be aged 60 or over. You will have to prove your age for by showing proof like birth certificate or pension book.
  • You also need to prove that you own the home and have no outstanding mortgage on the same. Your solicitor can do this for you.
  • A maximum of two applicants will be required.

Why Take A Lifetime Rate Mortgage?

  • It affords you to manage your properties, enjoy them and share them with your loved ones while you are still alive.
  • You get to have a one-off lump sum, regular monthly amounts or a mix of both, depending on your choice. It is like having your retirement all over gain.
  • Good thing is, you still own your home, live in it without worrying for the monthly repayments.
  • You need not worry about having your estate left in debt. Be sure to have a guarantee that your estate will not have to pay back more than your home is worth, in case prices fall.
  • You can also set aside a portion of your property's value to leave as an inheritance. For as long as the mortgage conditions have been met, this amount will not be touched when the mortgage is repaid. Choosing this option will however, affect the maximum amount you can borrow.
Fees to Pay in Lifetime Rate Mortgage

In a typical Lifetime Rate Mortgage, the applicant needs to pay the following:

  • A valuation fee - this is dependent on the value of the property
  • A telegraphic transfer fee - this is the cost of transferring the funds from the lender to the borrower's solicitor
  • Borrower's own legal fees - this includes the costs incurred by the borrower's solicitor
  • A completion fee - some lenders include their solicitor's legal costs in this fee
  • Early repayment charge - this applies only if the borrower makes a voluntary repayment of all or part of the outstanding mortgage balance. For most lenders it is only payable if the mortgage is redeemed in the first five years of the mortgage term.
  • Sealing fee - this is collected when the mortgage is repaid and covers the cost of administration work.