Later Life Lending
Mortgage choices for the over-55s have traditionally been limited by age restrictions and inflexible affordability calculations. However, innovation in this space means there are now attractive options available for over-55s looking, for example, to make their retirement more comfortable or enjoyable, help family members get on the housing ladder, or avoid having to downsize.
Equity release earned a poor reputation in the eighties and nineties, as it was poorly regulated and left many borrowers owing more than the value of their homes or even their estates. Today, however, the majority of equity release products have a ‘no negative equity’ guarantee (all of the equity release products that we recommend have this) and some allow you to ring-fence an amount that will pass to your beneficiaries. And later life lending is no longer just about equity release; it can be a financial planning tool which allows you the flexibility to plan your retirement.
Later life lending products include:
– Lifetime Mortgage
– Home Reversion Plan*
Retirement Interest-Only Mortgage
Our specialist advisors will talk you through all of these options, advise according to your specific circumstances, lay out all the potential costs, and will guide you through possible pitfalls as well as the benefits of the various products available.
With a lifetime mortgage, you can release tax-free cash from your property as a lump sum, as an income or both, while still continuing to own and live in your home. The loan is then repayable only when you pass away, or go into full-time care. There is no commitment to monthly repayments and you’re protected by the “no-negative equity guarantee”, meaning you will never owe more than the value of your home.
Home Reversion Plan
A home reversion plan* is when you sell your home, or a percentage of it, to a provider in exchange for a discounted lump sum. Therefore, unlike a lifetime mortgage, there is no interest, and you can benefit from any house price increase on the percentage of the property you own. However, a home reversion plan is less flexible than a lifetime mortgage as it can be difficult to end the plan and buy back the percentage you sold.
*Kinnison do not advise on this service; we will refer you to an approved specialist for home reversion plans.
Retirement Interest-Only Mortgages
A retirement interest-only mortgage or RIO is similar to a conventional interest-only mortgage where you are only required to make the interest payments on the loan on a monthly basis. As long as the payments are maintained, the balance will remain the same.
With most RIO mortgages, you are only required to repay the loan if you sell your property, move into long-term care or die. But some retirement interest-only mortgages carry a fixed term like a regular mortgage, meaning the loan must be repaid when you reach a certain age or after a set number of years.