Lifetime equity release also known as Equity release Mortgage is just one of the available equity release options and likely to be the most well known scheme so far. Lifetime equity release is the most generally known type of equity release scheme available, and works in a easy manner allowing you to borrow money against the value of your house or property without any monthly payments.
Generally, lifetime mortgages are arranged on a fixed rate basis that enables you to calculate exactly how much interest is charged and added to the principal loan amount. Since no monthly payments are made, the interest is compounded against the principal loan amount at the fixed rate of interest. Normally, interest is charged annually, but you should consult your adviser as some loan providers advertise their monthly interest rates, which yields a greater annual rate after compounding monthly. As long as the mortgage loan remains intact, the interest will continue to be charged to the growing principal amount. Repayment of the mortgage loan is made when, either the property is sold or after your death. Lifetime equity release is a reasonably simple and recommended product.
General Features
- No monthly repayments
- Cash released can be taken as a tax free bulk amount.
- You don’t have to worry about inflation in interest rates since interest rates are fixed.
- You may be able to guarantee and safeguard a percentage of the property value for your successors.
Key features to consider while applying for a Lifetime equity release
- Drawdown facility
- Increasing cash reserve
- Equity protection
- Early repayments penalties
- Interest calculation Method
Costs
When you decide to move on with a mortgage application, your house will be surveyed and valued by the loan provider. This will calculate the value of your house and the exact amount that can be released. Although some loan provider offers free evaluation and no lender arrangement fee, still the cost of the evaluation is up to you.
Valuation Fee:
The amount of the valuation fee will be dependent on the value of your house or property. Considering a rough calculation, with a property value of $ 200,000 you can expect to pay in between $ 400 – $ 600. Additional costs will depend on the amount of equity you would like to release and type of plan you choose.
Lender Fee:
It includes arrangement, completion and application fee and covering administration costs and are normally between $250 – $600
Solicitor’s Fee:
These are slightly lower with firms that specialize in equity release; otherwise it can vary widely among solicitors. A normal charge would be $ 300 – $ 500
Insurance:
The loan provider will require that you maintain a preferable valid building insurance policy for the period of the lifetime mortgage. The cost depends on the size and type of property you live in.