Equity Release Mortgage
An equity release mortgage is the prime method of releasing equity from your home. There are a number of Equity Release Mortgage options that can be made available to a home owner and we have outlined some of the main mortgage methods of releasing equity in the “How It Works” section of the website.
The lifetime equity release mortgage is a loan whose principal and interest are payable at once, at death or relocation of the borrower. It is secured by a mortgage on a property that already belongs to the homeowner. Below are answers to some of the common questions of equity release mortgages (lifetime mortgages).
How it works?
The lifetime mortgage is a loan to an individual in the form of a capital or periodic payments, secured by a mortgage on a property giving the borrower the exclusive use of their home ( primary residence or secondary use property rental ...).
Repayment of this loan may not be required until the death of the borrower or on the disposition or the dismemberment of ownership of the mortgaged property, if submitted before the death. The principal and interest are repayable at maturity, upon the death or relocation of the borrower. The borrower is secured by the fact that the debt can not exceed the value at the time of repayment of the mortgaged property.
What is the advantage of this type of credit?
This type of loan can be paid as an annuity or capital. The equity release mortgage has the following advantages:
- provides liquidity for your assets without you having to move,
- supplements your retirement income
- helps people meet unexpected expenses (health, addiction, compensation for housing) or help your offspring (grandchildren of studies ...)
- helps fund the daily necessities of life
- provides capital for your children and family before you die
- can be used for improving your home
- allows you to raise extra cash whilst allowing you to remain in your property
- is offered tax free to the borrower
Your debt is limited: your debt will not exceed the value of the mortgaged property. The amount borrowed is limited to a portion of the property value, determined by age and sex of the borrower and the appraised value of the property.
The maximum amount of debt (principal and interest) after the contract is capped at the value of the estimated contract maturity (death or long term care). The reimbursement can not exceed the amount of the value of the property at the time of death. If the price of the property is greater than the debt, then the difference must be paid to you (or your heirs). If not, that is to say if the price is well below the debt, the loss should be borne by the lender (regulated by SHIP).
At death, the estate may choose to keep the property, paying the loan, which can then be rescheduled. Otherwise, it benefits from the residual value of the property after reimbursement. That is, if the property value exceeds the debt, the surplus goes to heirs.
If you would like to discuss the best Equity Release Mortgage option for your circumstances, then contact us and we will be glad to guide you to the most suitable Equity Release Mortgage. We will use all our experience to help you find the most suitable product for your needs.