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The way we buy houses has changed somewhat in recent years. Whereas, once, it was commonplace to have paid off a mortgage towards the end of your working life, many retirees are now still making mortgage payments long after they reach the age of retirement.
That may be because your mortgage has been extended over a longer period of time, or because your personal situation has changed – due to divorce, perhaps, and you’re ‘starting again’ later on in life with a new partner.
Either way, with a lifetime mortgage you may find you can repay your original mortgage, and perhaps free up some of the equity that’s built up due to rises in the property market. With a lifetime mortgage in place, you will reduce an inheritance and it may affect your entitlement to state benefits. You may have to pay an early repayment charge to your existing lender if you remortgage.
Your financial adviser will remind you that it’s important to use other savings or investments first before considering a lifetime mortgage. And there may be ways to borrow money that are more cost-effective. However, if you’re confident that you’ve exhausted all the alternatives, and you’d still like to explore a lifetime mortgage as being a practical option for your situation, your adviser will help you through the next steps and proceed with an application.
Terry and Cara are both 67 and retired. They took out an endowment mortgage of £98,000 back in 1992. Their monthly payments covered the interest only for the mortgage term, and they paid into an endowment policy too. They had hoped the endowment would pay off the capital balance at the end of the mortgage, perhaps with something left over too.
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Couple being advised
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