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    Professional financial planning is the process which aims to help you realise your ambitions - whatever they may be. As professional financial advisers we can help you make informed decisions about your financial future, in the short, medium and long term.

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    If you're over the age of 55, equity release offers you a way to use the value of your home to raise money which can be used for any purpose. Some examples might include to provide an additional income, for home improvements, to fund long term care or to provide lifetime gifts to relatives.


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Related Topics
Home    Lifetime Mortgage
  • Costs
  • Drawdown Lifetime Mortgage
  • Home Income Plan
  • Home Reversion Plan
  • Introduction to Equity Release
  • Types of Equity Release

Lifetime Mortgage

EQUITY RELEASE WILL REDUCE THE VALUE OF YOUR ESTATE AND CAN AFFECT YOUR ELIGIBILITY FOR MEANS TESTED BENEFITS.

How does it work?

A lifetime mortgage is a form of equity release scheme whereby a loan is secured against your property, providing you with a tax-free cash lump sum or a regular income to spend as you wish.

Although there are Lifetime mortgages where you pay the interest (and possible capital) as it accrues, commonly Lifetime mortgages are arranged on a roll-up basis, meaning that borrowers will not be required to make payments during the term of the loan, instead the lender adds the interest that accrues to the original loan amount. ‘Roll-up plans’ can be very useful but borrowers must remember that the amount of the mortgage debt can increase quickly due to ‘compounding’ – i.e. you will be charged interest on the original loan and any interest that is added to the loan account.

Interest is added to the lifetime mortgage loan throughout your lifetime, accruing at a fixed or variable rate. The loan plus interest is eventually paid back when the home is sold which could be when you move into long term care, or when you and your partner die. Subject to your age you can typically release between 18-50% of the value of your home with a lifetime mortgage.

ADVANTAGES

  1. Choose a cash lump sum or regular income, typically with no monthly repayments to meet
  2. You still own your home so all growth in the value (if any, of course) belongs to you
  3. Loans with 'No negative equity' guarantee are available
  4. Some plans enable you to guarantee an inheritance for your family
  5. Plans can be taken out as young as 55

DISADVANTAGES

  1. Inheritance amount will be reduced
  2. Interest rates may be higher than for normal mortgages due to the long-term nature of the loan.
  3. The amount owed on the loan can mount up quickly as interest is compounded.
  4. Early repayment charges may apply
  5. Tax position and certain state benefits will be affected
  6. You could raise a larger amount with a reversion plan, especially at a younger age

Please note: You can get interest only lifetime mortgages wherein you pay interest monthly, but lifetime mortgages are mainly offered as 'rolled up' interest. 'Rolled up' interest is paid off altogether in one final payment along with the total amount of your loan when your property is sold, as described above.

EQUITY RELEASE WILL REDUCE THE VALUE OF YOUR ESTATE AND CAN AFFECT YOUR ELIGIBILITY FOR MEANS TESTED BENEFITS.

How does it work?

A lifetime mortgage is a form of equity release scheme whereby a loan is secured against your property, providing you with a tax-free cash lump sum or a regular income to spend as you wish.

Although there are Lifetime mortgages where you pay the interest (and possible capital) as it accrues, commonly Lifetime mortgages are arranged on a roll-up basis, meaning that borrowers will not be required to make payments during the term of the loan, instead the lender adds the interest that accrues to the original loan amount. ‘Roll-up plans’ can be very useful but borrowers must remember that the amount of the mortgage debt can increase quickly due to ‘compounding’ – i.e. you will be charged interest on the original loan and any interest that is added to the loan account.

Interest is added to the lifetime mortgage loan throughout your lifetime, accruing at a fixed or variable rate. The loan plus interest is eventually paid back when the home is sold which could be when you move into long term care, or when you and your partner die. Subject to your age you can typically release between 18-50% of the value of your home with a lifetime mortgage.

ADVANTAGES

  1. Choose a cash lump sum or regular income, typically with no monthly repayments to meet
  2. You still own your home so all growth in the value (if any, of course) belongs to you
  3. Loans with 'No negative equity' guarantee are available
  4. Some plans enable you to guarantee an inheritance for your family
  5. Plans can be taken out as young as 55

DISADVANTAGES

  1. Inheritance amount will be reduced
  2. Interest rates may be higher than for normal mortgages due to the long-term nature of the loan.
  3. The amount owed on the loan can mount up quickly as interest is compounded.
  4. Early repayment charges may apply
  5. Tax position and certain state benefits will be affected
  6. You could raise a larger amount with a reversion plan, especially at a younger age

Please note: You can get interest only lifetime mortgages wherein you pay interest monthly, but lifetime mortgages are mainly offered as 'rolled up' interest. 'Rolled up' interest is paid off altogether in one final payment along with the total amount of your loan when your property is sold, as described above.

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Square One Wealth Management LLP
Maple Barn
Beeches Farm Road
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The Financial Conduct Authority does not regulate Inheritance Tax Planning.

Square One Wealth Management LLP is an appointed representative of Quilter Financial Limited which is authorised and regulated by the Financial Conduct Authority. Quilter Financial Limited are entered on the FCA register (http://www.fca.org.uk/register) under reference 497604.

Square One Wealth Management LLP is registered in England and Wales, No. OC304412. Registered Office: Maple Barn, Beeches Farm Road, Shortgate, Near Uckfield, TN22 5QD.

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