For some people, and it is advice we decline more often than we give. It lets you take tax-free cash out of your home without moving, and the cost is that the interest rolls up and reduces what is left behind.
On a standard lifetime mortgage you pay nothing each month. The interest is added to what you owe, and next year's interest is charged on the bigger number. Left alone for long enough the debt roughly doubles every fourteen years at 5%. How long it runs matters more than the rate.
Ask for the illustration that shows the projected balance at five, ten, fifteen and twenty years alongside a projection of the property value. Those two lines together are the honest picture, and any adviser has to give them to you.
Paying the interest monthly, or making the voluntary partial repayments most modern plans allow, stops or slows the roll-up entirely. Taking the money in stages through a drawdown facility means interest only runs on what you have actually taken.
Equity release reduces the value of your estate and may affect your entitlement to means-tested benefits. A lifetime mortgage is a loan secured against your home. It is not right for everybody.
With a lifetime mortgage, yes. It is a loan secured against the property and you remain the owner. A home reversion plan is different — you sell a share of the property — and it is much less common.
Yes, and some plans let you ring-fence a percentage of the value as guaranteed inheritance. It reduces how much you can borrow.
It can. Releasing capital may take you over the savings thresholds for means-tested benefits such as Pension Credit and council tax support, so the gain can be partly offset. It has to be checked beforehand.
Most Equity Release Council plans are portable to another suitable property, subject to the lender's criteria. Some property types are not acceptable, so it is worth asking if a move is likely.
Repaying early usually triggers an early repayment charge, which on some plans is substantial. The terms vary a lot and are worth comparing.
You get the alternatives, the cost over twenty years and the effect on your benefits and your estate, in writing, with the numbers. Bring your children to the meeting if you want to.
Tell us what is on your mind: a pension you have lost track of, a fixed rate ending, a will you keep meaning to write. We will tell you honestly whether we can help.