How Sheffield homeowners can release equity
Sheffield residents struggling to get a mortgage later in life could find the answer is a lifetime mortgage.
You have worked hard for your home, now it’s time to let it look after you. A lifetime mortgage allows you to release some of the equity that you have built up over the years without having to downsize. Once you have repaid any existing mortgage that you may have, the tax-free money that you release is yours to enjoy.
With no requirement for affordability checks, no requirement to make monthly repayments, and no risk of your home being repossessed through not making repayments – an interest-only lifetime mortgage could hold the key to a new home, or a way of freeing up some much-needed property equity.
Is a lifetime mortgage right for me?
If you would like the flexibility of choosing when to make repayments, then a lifetime mortgage could be for you as you’re in control. You can decide to make repayments as and when your personal circumstances allow, as the money that you release, plus interest, is repaid to the lender when you die or move into long-term care.
If you would like to move home or access money with no requirement for an affordability assessment, then a lifetime mortgage could be for you.
Plus, if you would like to access some tax-free cash with the security of knowing that your interest rate won’t rise in two, five or 15 years’ time, then a lifetime mortgage could be for you, as the rates that you can secure now are fixed for life, meaning no nasty surprises.
A lifetime mortgage is a type of equity release and involves a loan secured against your home. It won’t be right for every situation as it’s a lifelong commitment, but is certainly worth considering and researching further if you’re aged 55 or over and own your own home.
What about a Retirement-interest only mortgage (RIO)?
A RIO can provide an alternative to a standard mortgage or a lifetime mortgage. They are a relatively new type of product. Just like a lifetime mortgage, you only repay the loan once you die or move into long-term care, however with a RIO you will have to pass an affordability check as you will be repaying the interest on the loan every month.
Get specialist advice
A specialist adviser like Age Partnership will help you explore your options, including standard mortgages, RIOs and lifetime mortgages. They can prepare a personalised illustration which explores the benefits as well as explaining the risks involved. For example how releasing a lump sum of cash may affect your entitlement to means tested benefits both now and possibly in the future. And, as you’re accessing some of your property equity, it will reduce the value of your estate.