Later life mortgages and equity release – by our partners Oliver Jones Associates Limited.
After the financial crash of 2007 lenders became wary when lending into retirement and other tools such as Interest Only mortgages were severely restricted. Much has changed in the last 10 years. The state pension age has increased, property values in some areas have grown significantly, whilst incomes for some have remained fairly static. As a result, more people are taking out mortgages later in life and are wanting flexibility.
We spend most of our working lives striving to repay our mortgage by retirement, only to have an asset that is untouchable unless you downsize, which many people do not wish to do. Lenders are waking up to the massive potential available in the over 55’s mortgage market. After all, the over 55’s control most of the wealth of the nation. Homeowners may want to use the equity in their property to help fund their retirement, home improvements, pass on equity to children now rather than on death, the list is endless.
What has changed
Lenders are now actively looking to lend into old age, indeed many have no age limits at all. Options exist for Interest Only mortgages based on earned income and retirement income. Equity Release offers an alternative where lending is not focused on income.
Reasons for Taking Out Equity Release
- Home improvements
- Repay existing mortgage
- Pay off unsecured debts
- Help with day to day living
- Go on a holiday
- Gift to family
- Buy a new car
- Buy a new property
- Inheritance tax planning
These schemes offer increasing levels of flexibility as the market increases to fill the demand. The ability to pay part or all the interest on a loan where you do not wish the debt to increase. No proof of income required. Flexibility to waive any penalties should you wish to move house. Fix the interest rate for the mortgage term. The debt only being repaid on death or clients moving into long term care leaving the property left empty.
These can be either a stop gap or longer term arrangement where a high street lender will lend based on earned income or retirement income. Rates can be fixed or variable, usually up to 5 years.
Some lenders are now offering both Equity Release and standard mortgages to the over 55’s. This allows you to take a standard mortgage whilst still working or in early days of retirement and then transferring to an Equity Release roll up of interest mortgage later when either income levels prevent interest payments or where clients just do not wish to pay anymore.
With so many options available it’s essential to find an advisor that gives holistic advice on the Later Life mortgage market rather than just a Specialist Equity Release Advisor. We will provide you with impartial advice together with comprehensive customer support and guidance.
Our fees are tailored to your individual requirements and are based on the products you need. The precise amount you will be charged will depend on your personal circumstances but our typical advice fee is £995 which is only charged when your plan completes. To understand the full features and risks, simply ask us for a personalised illustration.
Equity Release reduces your estate’s value and may affect any means-tested benefits you’re eligible for. A Lifetime mortgage is a loan secured against your home.
Grenville Lunn, Senior Mortgage Consultant, Oliver Jones Associates Limited.