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How Does a Lifetime Mortgage Work in Durham?

Lifetime mortgages in Durham are a form of later life mortgage, designed for homeowners aged 55 and above.

They offer the opportunity to release some of the equity tied up in your property without the need to sell or move out. The amount you can borrow depends on factors such as your age and the property’s value.

Unlike regular mortgages, with a lifetime mortgage, you don’t have to make monthly repayments. Instead, the loan is repaid when you pass away or move into long-term care. Over time, the amount owed increases due to the accrued interest.

Many lenders allow the interest to roll up, meaning it’s added to the total loan amount. When the property is eventually sold, the loan is repaid from the proceeds. However, it’s important to note that taking out a lifetime mortgage can impact the inheritance you leave behind for your loved ones.

Additionally, not repaying the interest could affect eligibility for means-tested benefits. Before considering a lifetime mortgage in Durham, it’s advisable to seek advice from a qualified professional. They can explain the potential implications and help you make an informed decision.

The Difference Between Lifetime Mortgages and Equity Release

Equity release in Durham offers various options, including lifetime mortgages and home reversion plans. A lifetime mortgage allows homeowners to borrow against their property’s value, while a home reversion plan involves selling a portion of the property.

For those considering a lifetime mortgage, it’s essential to understand the two main types: lump sum and drawdown.

A lump sum provides a large amount upfront, while drawdown allows you to release funds as needed. The interest can accumulate over time, affecting the amount of inheritance left for your beneficiaries.

Working with a mortgage advisor in Durham is important to navigate these options. They can offer expert guidance tailored to your circumstances, ensuring you make the right choice.

Types of Lifetime Mortgage

Lump sum and drawdown are the two main types of lifetime mortgages available in Durham. A lump sum release provides a large amount at once, allowing flexibility in usage. However, this results in a larger loan balance.

On the other hand, a drawdown lifetime mortgage offers the ability to release funds gradually as needed. With this option, you only pay interest on the amount released, making it a more cost-effective choice if you don’t require all the funds immediately.

When considering these lifetime mortgages, you’ll need to decide whether to let the interest accumulate. This can impact the inheritance you leave behind. However, a mortgage advisor can help structure the loan to protect a portion of your equity for inheritance purposes.

As members of the Equity Release Council, we offer a “No Negative Equity Guarantee,” ensuring your estate won’t owe more than the property’s value even if the debt exceeds it.

How is a lifetime mortgage repaid?

When your lifetime mortgage in Durham reaches its end, whether due to passing away or moving into long-term care, the borrowed amount must be repaid. This repayment is usually achieved through the sale of the property.

Over time, if you chose not to make interest payments, the total repayment amount includes the accumulated interest. It becomes the responsibility of your beneficiaries or estate executors to initiate the property’s sale to repay the lender.

Most lenders allow a 12-month period for this process. If the property isn’t sold within this timeframe, the lender may take steps to sell it themselves. However, lenders typically understand market conditions and aim for fair prices.

What are the pros and cons of a lifetime mortgage?

A lifetime mortgage in Durham offers homeowners the ability to unlock their property’s value without selling it. This can provide a lump sum or regular income, allowing you to access funds while remaining in your home.

One key advantage is the absence of monthly repayments, as the interest is added to the loan balance. The loan is typically repaid from the property’s sale after you pass away or move into long-term care.

However, there are considerations. The amount you can borrow depends on factors like age and property value. Interest accrual means the total owed can grow over time, affecting inheritance. It may also impact certain state benefits.

To make an informed decision, seek guidance from a specialist mortgage advisor. They can explain the implications and help you choose the right option.

Speak to a Lifetime Mortgage Advisor in Durham Today

Equity release and lifetime mortgages can be complex, which is why we offer free appointments with specialist mortgage advisors in Durham. During these sessions, you can discuss your situation and explore whether a lifetime mortgage is suitable for you.

Our advisors will explain the benefits and drawbacks, addressing any concerns or questions you have. Involving your family in these discussions is key.

Book a free mortgage appointment today to explore equity release in Durham. We’ll guide you through the process and help you make the best decision for your circumstances, whether it’s a lifetime mortgage or another solution.

To understand the features and risks, ask for a personalised illustration.

A lifetime mortgage may impact the value of your estate and it could affect your entitlement to current and future means-tested benefits. The loan plus accrued interest will be repayable upon death or moving into long-term care.

Date Last Edited: February 23, 2024

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