According to the latest report from the Equity Release Council, the total value of equity release lending in Q3 2016 grew more than a quarter (26%) year-on-year.
In an ever-ageing population, lenders have found themselves providing over £2bn in 2016 in lifetime mortgages, increasing the market share to 33%. The report went on to identify that one-off payments were often used for clearing outstanding mortgages or other debts in addition to funding home improvements, travel or providing a living inheritance.
High-street lending criteria
FACT: Many people are turning to specialists in providing later life lending as they fall outside of high-street lending criteria.
Rather than simply looking at the age of the applicant, later life lending specialists understand the need for this type of funding (for those aged 55 or over), and base funding on the value of the property it is secured against.
There are many reasons why someone would need funding later in life and although they include a lump sum or equity release for holidays, they are usually for house repairs, gardens, accessibility improvements and the awareness that their income may not be sufficient in their retirement.
The simple fact is that specialist lenders have spotted a need, and they are responding by helping people. Whether it’s to help a family member on the property ladder, enriching retirement income or making much-needed home improvements – Springtide Capital offers tailored lifetime lending solutions from a number of lenders.
A viable alternative
With a lifetime mortgage, the amount a person can borrow depends on their age and the value of their property and they won’t have to make any repayments before the end of the plan whilst still owning their home.
How it works:
- The interest payable on a mortgage is usually rolled up and added to the loan
- Funds can be accessed through either a lump sum or by using the drawdown functionality on the mortgage
- The loan is paid back in the event of death or when moving into permanent long-term care
Please be aware that taking out a lifetime mortgage could reduce eligibility for means-tested benefits and affect a person’s tax position. Taking out a lifetime mortgage may also reduce the options for moving or selling a home and carry consequences concerning inheritance.
To understand the features and risks of a lifetime mortgage, speak to one of our qualified specialists, who will provide you with a personalised illustration.
A lifetime mortgage will reduce the value of your estate, will not be suitable for everyone and may affect your entitlement to state benefits.